Steps to broaden Govt-Secs market soon: Raghuram
17 Nov 2013 4:06 AM IST
To broaden financial markets, the Reserve Bank will unveil steps to improve the liquidity and depth of government securities market in the coming weeks.
‘In the coming weeks, we will roll out more recommendations of the Gandhi Committee report to improve the liquidity and depth of the G-Sec market.
‘We will then turn to money markets and corporate debt markets. We will introduce new variants of interest rate futures and products like inflation indexed certificates, and work to improve liquidity in derivative markets,’ RBI governor Raghuram Rajan said at the BANCON 2013.
A 13-member group, headed by RBI executive director R Gandhi, has made various recommendations on G-Sec market, retail participation and interest rate derivatives market.
Among other things, the panel suggested that investment limit for foreign institutional investors (FIIs) in government securities should be increased gradually.
The present limits for investments by FIIs, QFIs and long term investors in government securities and corporate debt stands at $30 billion and $51 billion, respectively.
Rajan further said the Reserve Bank plans to build its developmental measures over the next few quarters on five pillars.
The pillars are: clarifying and strengthening the monetary policy framework, strengthening banking structure, broadening and deepening financial markets, expanding access to finance and improving the system's ability to deal with corporate and financial institution distress.
The government securities comprise dated securities issued by the Centre as well as state governments as also, treasury bills issued by the government. RBI manages and services these securities through its public debt offices. G-secs, also called the gilt edged securities, are not only free from default risk but also provide reasonable returns.
Speaking about the current slowdown, called for purposeful and effective action to counter the atmosphere of cynicism, which has slowed down the decision making process, and to tap growth opportunities
‘We are going through a period of great cynicism about what India can do. That cynicism does not just permeate the foreign press and their audiences, but also infects our domestic debates. Every policy is greeted with suspicion and scrutinised for evidence of malfeasance.
‘With no upside to making decisions, it is no wonder that decision making has slowed. The solution, however, cannot come through inaction but through action, action that is, and is seen to be, purposeful, unbiased, and effective,’ he said.
He further said that there would be mistakes, but if the weight of clean actions builds up, the suspicion that pervades in the society will ebb.
Referring to five pillars of the financial sector policy of the central bank, Rajan said in the next few weeks measures will be announced to incentivise banks for early detection of bad loans and better resolution and fair recovery of non-performing assets.
For the benefit of customers, he said the RBI has set up committees, like the B Sambamurthy Committee, to advise it on how to expand mobile banking in India through encrypted SMS-based funds transfer in any type of handset.
‘In the coming weeks, we will roll out more recommendations of the Gandhi Committee report to improve the liquidity and depth of the G-Sec market.
‘We will then turn to money markets and corporate debt markets. We will introduce new variants of interest rate futures and products like inflation indexed certificates, and work to improve liquidity in derivative markets,’ RBI governor Raghuram Rajan said at the BANCON 2013.
A 13-member group, headed by RBI executive director R Gandhi, has made various recommendations on G-Sec market, retail participation and interest rate derivatives market.
Among other things, the panel suggested that investment limit for foreign institutional investors (FIIs) in government securities should be increased gradually.
The present limits for investments by FIIs, QFIs and long term investors in government securities and corporate debt stands at $30 billion and $51 billion, respectively.
Rajan further said the Reserve Bank plans to build its developmental measures over the next few quarters on five pillars.
The pillars are: clarifying and strengthening the monetary policy framework, strengthening banking structure, broadening and deepening financial markets, expanding access to finance and improving the system's ability to deal with corporate and financial institution distress.
The government securities comprise dated securities issued by the Centre as well as state governments as also, treasury bills issued by the government. RBI manages and services these securities through its public debt offices. G-secs, also called the gilt edged securities, are not only free from default risk but also provide reasonable returns.
Speaking about the current slowdown, called for purposeful and effective action to counter the atmosphere of cynicism, which has slowed down the decision making process, and to tap growth opportunities
‘We are going through a period of great cynicism about what India can do. That cynicism does not just permeate the foreign press and their audiences, but also infects our domestic debates. Every policy is greeted with suspicion and scrutinised for evidence of malfeasance.
‘With no upside to making decisions, it is no wonder that decision making has slowed. The solution, however, cannot come through inaction but through action, action that is, and is seen to be, purposeful, unbiased, and effective,’ he said.
He further said that there would be mistakes, but if the weight of clean actions builds up, the suspicion that pervades in the society will ebb.
Referring to five pillars of the financial sector policy of the central bank, Rajan said in the next few weeks measures will be announced to incentivise banks for early detection of bad loans and better resolution and fair recovery of non-performing assets.
For the benefit of customers, he said the RBI has set up committees, like the B Sambamurthy Committee, to advise it on how to expand mobile banking in India through encrypted SMS-based funds transfer in any type of handset.
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