The Reserve Bank of India on Friday got here out with draft norms for lending and borrowing of authorities securities with wider participation within the securities lending market.
Earlier this month, the RBI proposed introduction of securities lending and borrowing in authorities securities (G-secs) with an purpose to facilitate wider participation within the securities lending market by offering buyers an avenue to deploy idle securities and improve portfolio returns.
“Government Securities Lending (GSL) transactions shall be undertaken for a minimum period of one day and a maximum period of ninety days,” stated the draft Reserve Bank of India (Government Securities Lending) Directions, 2023.
It has invited feedback from banks, market members and different events by March 17, 2023.
The draft stated authorities securities issued by the central authorities excluding Treasury Bills could be eligible for lending/borrowing below a GSL transaction.
Government securities issued by the central authorities (together with Treasury Bills) and the state governments could be eligible for putting as collateral below a GSL transaction, it added.
An entity eligible to undertake repo transactions in authorities securities, and another entity authorized by the Reserve Bank could be eligible to take part in GSL transactions as lender of securities.
