The Reserve Bank of India (RBI) has issued draft guidelines on lending and borrowing of government securities, according to a press release on Friday.
In its latest monetary policy statement in December, the central bank had announced that it will permit lending and borrowing of government securities which will augment the existing market for ‘special repos’.
The system is expected to facilitate wider participation in the securities lending market by providing investors an avenue to deploy idle securities and enhance portfolio returns.
“Government securities lending transactions shall be undertaken for a minimum period of one day and a maximum period of ninety days.
The transactions may use any mutually agreed trading process, including but not limited to, bilateral or multilateral, quote driven or order driven processes, anonymous or otherwise,” according to the draft guidelines.
The central bank has invited comments on the draft directions from banks, market participants and other interested parties by March 17.