Market expect new steps to boost G-Sec retailing

Atmadip Ray

Mumbai, Oct 17: Expectations of several new policy initiatives are thick in the air as the mid-term review of the monetary and credit policy for the 2001-02 by the Reserve Bank of India slated for October 22.

Market players are expecting new measures in line with RBI’s goal of financial sector reforms. Many expect policy measures on retailing the government securities (G-Secs), as also developing the private placement in G-Secs.

Retailing in the G-Secs has been gaining importance as this market is poised to grow in a big way in the future. Analysts expect G-Secs market to grow at least to the size of equity markets within the next three to five years. Against this backdrop, the sources pointed out that the RBI might set a retailing target for the individual primary dealers (PDs). The RBI might also appoint a panel to finalise the modalities of reatiling G-Secs.

Another area is the private placement in debt market. The market expects the RBI to come out with comprehensive guidelines to enable greater monitoring of this market for transparency. RBI deputy governor Dr YV Reddy had hinted at a such a possibility.
“The RBI may direct banks, financial institutions (FIs), PDs to follow certain prescribed norms, which would be mandated in this mid-term review.

It is also expected that RBI would outline norms for investment in the private placement market,” sources said. At present, the primary placement market is not under the regulations of either the RBI or the Securities and Exchange Borad of India (Sebi).

The RBI is also expected to formalise a time-frame for operationalising the real-time gross settlement (RTGS) and negotiated dealing system. “In the last two credit policies, the RBI was silent on RTGS. So it is very likely that some announcement will be there regarding this,” the sources said.

Even though the volume in the primary treasury bill (T-bills) market for 91- and 364-days has been seeing an uptick, the secondary market T-bills market is still immature.