RBI Governor Shaktikanta Das.
| Photo Credit: ANI
Reserve Bank Governor Shaktikanta Das on April 8 pressured the necessity for greater participation of Indian banks in rupee derivatives market, each domestically and offshore, whereas being prudent.
The Governor famous that participation of home banks in by-product markets stays restricted with solely a small set of energetic market-makers. Also, participation of Indian banks in world markets is rising however it’s fairly small.
“Domestic banks are dealing with market-makers in global markets rather than with end clients and are yet to emerge as market-makers of note globally,” Das mentioned in his keynote deal with on the FIMMDA-PDAI Annual Conference in Barcelona.
Of course, he added banks have to do their very own due diligence, assess their threat urge for food, after which transfer ahead rigorously in this route.
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“Going forward, our focus should be on enhancing and widening the participation of Indian players in markets for INRderivatives, both domestically and offshore, while being prudent,” the Governor mentioned.
He famous that the latest monetary market reforms undertaken by the Reserve Bank are aimed toward offering a robust bedrock for markets to maneuver to the following trajectory for assembly the rising funding necessities in the economic system, offering cost-effective hedging choices and competing successfully in world markets.
There are, nonetheless, some areas which name for consideration, he mentioned, whereas highlighting particular areas the place extra could be executed.
Das mentioned transparency in pricing stays work in progress and extra could be executed.
“The retail customer is yet to get a deal at par with large customers. There is a need for effective market-making and finer pricing for smaller deals on NDS-OM,” he mentioned.
Divergence in pricing in FX markets for small and huge prospects is wider than what could be justified by operational issues, Mr. Das mentioned, and added that banks might have to do extra to facilitate the use of the FX Retail platform..
“We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX trading platforms. This warrants enhanced vigilance by the banks,” the Governor mentioned.
He additional mentioned efforts are being made to leverage know-how for attaining greater effectivity whereas additionally assembly the targets of market reforms.
Also Read | RBI’s stance on underlying publicity for FX derivatives mentioned to be unchanged
The Reserve Bank, he added stays engaged with stakeholders to evaluate the necessity for the introduction of new merchandise and infrastructure primarily based on evolving market developments.
“Innovation has been sought to be promoted through a move towards principle-based regulation, widening of the participant base, introduction of new products and platforms as well as enabling access to offshore markets,” Mr. Das mentioned.
In his deal with, the governor additionally dwelt upon the journey of the Reserve Bank, particularly in the context of its function in creating the monetary markets in India in the latest interval.
The RBI has entered its ninetieth 12 months of its formation on April 1, 2024.
