​​​
  1. Governor Raghuram Rajan-led RBI to be stripped of powers to regulate government bonds

Governor Raghuram Rajan-led RBI to be stripped of powers to regulate government bonds

The move to divest Guv Raghuram Rajan-led RBI of its powers is part of a major overhaul of the financial system...

By: | Mumbai | Published: March 18, 2015 6:02 PM
RBI Governor Raghuram Rajan during a conversation at the RBI headquarters in Mumbai on Tuesday. PTI

RBI Governor Raghuram Rajan at the RBI headquarters in Mumbai on Tuesday. PTI

Indian government plans to strip the Governor Raghuram Rajan-led Reserve Bank of India (RBI) of its powers to regulate government bonds, but leave the central bank in charge of other money market instruments, three government sources with direct knowledge of the matter said on Wednesday.

The move is part of a major overhaul of the financial system that aims to deepen bond markets by increasing the participation of retail investors and improve the transmission of monetary policy, the sources said.

“The objective is to push financial sector reforms,” said one of the sources, who declined to be identified because he was not authorised to speak to the media.

“You need a bond market that is well functioning where retail and corporate investors can participate.”

Take the opinion poll, tell us what you think:

Changes proposed by Finance Minister Arun Jaitley in his budget last month triggered speculation that the government was also looking to transfer money market regulation from the RBI to the Securities and Exchange Board of India (SEBI), India’s stock market regulator.

However, the sources said the government’s plan is to only take the regulation of government bonds from the central bank.

“The RBI will continue to regulate all other monetary instruments,” another source said.

The sources said the central bank opposes the proposed overhaul, which will diminish its powers and leave it primarily as a body that sets interest rates and regulates the banking sector.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top