Ramesh, who is also the managing director of the Discount Finance House of India (DFHI), said that a few issues have been eluding satisfactory resolution. According to him, one such is the settlement of funds under the delivery versus payment (DVP) system. Ramesh was delivering the chairman's address to the shareholders of PDAI at the second annual general meeting.

According to Ramesh, one aspect which has been coming into sharper focus in the discussion with the RBI is the expansion of retail market for government securities. Notwithstanding the operationalisation of satellite dealers and the fundingsupport extended to them by the RBI, the growth in the retail market for government securities has not been to the desired level.

One of the major causes identified for the slow growth in the retail market was the lack of knowledge about the operational aspects of the government securities market among the retail investors, he pointed out.

"It was a matter of great satisfaction that the gilts market was showing visible signs of buoyancy since the beginning of the year with the daily trading columes reaching new peaks," Ramesh said. Notwithstanding the high quantum (of trading), the fact that a major part of government borrowing was competed at extremely competitive terms speaks of the remarkable skill and market management displayed by RBI, he added.

However, in the process RBI has been resorting to open market operations rather frequently and flooding the market with a surfiet of issues will naturally dampen the market, he observed. This, in turn, is likely to affect the viablity of the operation ofintermediaries like PDs which are essentially short-term investors and whose fortunes are affected by short term movements of the market.