Financial Daily from THE HINDU group of publications
Wednesday, Sep 25, 2002
Financial Daily from THE HINDU group of publications Wednesday, Sep 25, 2002 |
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Money & Banking
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Debt Market RBI looks at widening repo market base Our Bureau
MUMBAI, Sept. 24 THE Reserve Bank of India (RBI) is exploring the possibility of widening the base of the repo market including extending it to non-SGL account holders like CSGL account holders, according to Mr H.R. Khan, CGM, Reserve Bank of India. Speaking at the Business Asia seminar, `The 2nd Round Table on Debt Market', here today, Mr Khan said, the apex bank was looking into the introduction of a longer term repo, rollover of repo's, and area's like taxation and standardised accounting. Mr Khan also said that RBI will shortly make available information on trades that take place, on the Negotiated Dealing System Screens (NDS). Speaking on the issue of commercial paper, Mr Khan said, there is too much focus on `AAA' rated papers by market participants. There is a need to promote lower grade papers as well, like the `AA' rated papers and this can be done through proper information flow. Mr M. Raju, Regional Commissioner for Provident Funds said, that although provident funds can invest 10 per cent of their corpus in `AAA' rated securities, there is still some apprehensions on account of safety issues. According to Mr D. Basu, Chairman, Securities Trading Corporation of India Ltd (STCI), the measures under discussion between RBI and G-sec market participants relate to permitting short sales and deals on "when issued'' basis and the lending and borrowing of securities. The two major impediments to the sale of G-secs to the retail investor, he said, was that G-secs suffer from significant tax discrimination when compared to other financial products of comparable credit quality. The other factor he said is the reluctance of the Government and RBI to utilise the services of financial product distributors such as brokers, investment advisors etc, to pay them an incentive even though it is freely paid for distributing other products like Relief Bonds and small savings schemes.
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