RBI to allow lending, borrowing of government securities, raises market trading hours
RBI Governor Shaktikanta Das, while announcing February monetary policy outcome, said the step would provide investors with an avenue to deploy their idle securities, enhance portfolio returns and facilitate wider participation.
- Feb 8, 2023,
- Updated Feb 9, 2023 12:25 AM IST
Reserve Bank of India (RBI) on Wednesday proposed to permit the lending and borrowing of government securities (G-Secs). RBI Governor Shaktikanta Das, while announcing February monetary policy outcome, said the step would provide investors with an avenue to deploy their idle securities, enhance portfolio returns and facilitate wider participation.
The central bank also decided to restore market hours for the G-Secs market to the pre-pandemic timing. "As part of our gradual move towards normalising liquidity and market operations, it has now been decided to restore market hours for the Government Securities market to the pre-pandemic timing of 9 am to 5 pm," the RBI Governor stated.
It would also add depth and liquidity to the G-Secs market; aid efficient price discovery; and work towards a smooth completion of the market borrowing programme of the Centre and states, Das added.
The Reserve Bank raised the key policy repo rate by 25 basis points (bps) to 6.50 per cent, in line with economists' expectations, and said it remained focused on the withdrawal of accomodation.
The continued rate hikes by central banks across the globe (BoE, ECB & US Fed) and the implications in the foreign exchange market influenced RBI to go for another rate increase, said Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers.
"Unless there is an unexpected flare in inflation, we would expect RBI to maintain an unchanged policy rate for the remainder of 2023. This would be positive both for the debt and equity markets," Hajra stated.
RBI has projected retail inflation at 6.5 per cent for FY2022-23, and 5.3 per cent for the next fiscal (FY24).
Domestic retail inflation finally came within the RBI's tolerance band of 2 per cent-6 per cent in the last two months of 2022. The consumer price-based inflation slipped to a one-year low of 5.72 per cent in December last year from 5.88 per cent in November 2022.
The RBI Governor also mentioned that the Indian economy looks resilient even though considerable uncertainties remain on global commodity prices. It has projected a growth rate of 6.4 per cent for FY24.
Also Read: Adani Ports shares: Despite a target price cut, Kotak suggests 45% potential upside
Reserve Bank of India (RBI) on Wednesday proposed to permit the lending and borrowing of government securities (G-Secs). RBI Governor Shaktikanta Das, while announcing February monetary policy outcome, said the step would provide investors with an avenue to deploy their idle securities, enhance portfolio returns and facilitate wider participation.
The central bank also decided to restore market hours for the G-Secs market to the pre-pandemic timing. "As part of our gradual move towards normalising liquidity and market operations, it has now been decided to restore market hours for the Government Securities market to the pre-pandemic timing of 9 am to 5 pm," the RBI Governor stated.
It would also add depth and liquidity to the G-Secs market; aid efficient price discovery; and work towards a smooth completion of the market borrowing programme of the Centre and states, Das added.
The Reserve Bank raised the key policy repo rate by 25 basis points (bps) to 6.50 per cent, in line with economists' expectations, and said it remained focused on the withdrawal of accomodation.
The continued rate hikes by central banks across the globe (BoE, ECB & US Fed) and the implications in the foreign exchange market influenced RBI to go for another rate increase, said Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers.
"Unless there is an unexpected flare in inflation, we would expect RBI to maintain an unchanged policy rate for the remainder of 2023. This would be positive both for the debt and equity markets," Hajra stated.
RBI has projected retail inflation at 6.5 per cent for FY2022-23, and 5.3 per cent for the next fiscal (FY24).
Domestic retail inflation finally came within the RBI's tolerance band of 2 per cent-6 per cent in the last two months of 2022. The consumer price-based inflation slipped to a one-year low of 5.72 per cent in December last year from 5.88 per cent in November 2022.
The RBI Governor also mentioned that the Indian economy looks resilient even though considerable uncertainties remain on global commodity prices. It has projected a growth rate of 6.4 per cent for FY24.
Also Read: Adani Ports shares: Despite a target price cut, Kotak suggests 45% potential upside