The Reserve Bank of India (RBI) on Wednesday revised norms on short sale in the secondary market for government securities, which will come into effect from July 26. Short sale in central government securities (G-Secs) was introduced in February 2006 to provide participants with a tool to express two-way view on interest rates and thereby enhance price discovery. Prior to this revision, scheduled commercial banks, primary dealers and certain well-managed urban cooperative banks were permitted to undertake short sale transactions. The revised norms say any other regulated entity which has the approval of the regulators concerned, including the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority of India, will be considered an eligible entity to undertake short sales. Earlier, the RBI had said in its June policy that there are entity-wise and (liquid or illiquid) security-wise limits for undertaking short sale transactions. With an objective to deepen further the G-Sec and repo market, it is proposed to liberalise the eligible short sale participants\u2019 base as well as relax the entity-wise and security category-wise limits for short selling in G-Sec. The maximum amount of a security (face value) that can be short sold are: Liquid securities 2% of the total outstanding stock of each security, or, `500 crore, whichever is higher, and other securities 1% of the total outstanding stock of each security, or, `250 crore, whichever is higher.