The availability of funds through the Call Ltd Market up to 00.1 will increase the dependence on this market, which is regulated by the RBI, experts said.
Generally, most banks keep extra cash if there is a sudden flow because the payment systems are working 24×7. But in the absence of the Interbank Call Lt Money Market, they are parked surplus cache in the Central Bank window – standing deposit facility or SDF, one quarter percentage point, instead of lending to the Call L market, ET has reported on April 15.
According to bank Treasury officials, expansion of operating paiting hours for Call Lun money, traps (Tri-Party Repo Dealing System) and Market Repo segments has long been the market participants.
The executive group, chaired by RBI Executive Director Radha Shyam Rath, also recommended unifying and expanding the time of market repo and trap trading hours at 4:00 pm. Currently, it closes at 3:00 pm.
Following the implementation of RTGS 24×7, this demand has received a new urgency, which has made the banks challenging to manage the flow of sudden and large funds in the evening: 00: at 8 pm. In such situations, there is no option to rely on RBI’s MSF (marginalized facility) or SDF, “VRC Reddy, head of banks, said banks.
The RBI said the final view would be taken on the recommendations made by the working group. The last date for releasing comments is May 30.
Traps are an anonymous order matching system that facilitates borrowing and funding lending against government securities. Generally, mutual funds are a lender in this market.
According to the group report, the trap segment has the largest part of the money market overnight, with the% average volume in the market 69%, followed by 29% of the market repo.
The stake of Call Lt Money has gradually dropped from 13% in 2014-15 to about 2% in recent years. Nevertheless it is an important barometer because according to the current RBI policy structure, the Central Bank is intended to adjust the average Call L rate with the weight with the repo rate.
The working group recommends maintaining the current time for bonds and foreign exchange markets.
However, it recommends approval of onshore market our transactions in government securities with non-residents during the time window at 5:00 to 11:30 pm. Such transactions must be reported with a compromise on the basis of T +2, between 7:00 and 8:30 am on the NDS-AM, RBI-owned trading platform, T +1.
Rajiv Pawar, the head of the Treasury of Ujwan Small Finance Bank, said that there is a long demand for international banks for the extension of bond market time for foreign portfolio investors as it will provide easy access to their customers. “The US markets open after the end of Indian trade. The working group proposal will give them the opportunity to expose Indian bonds, especially if a geographical political event appears or some critical macroeconomic data comes out after hours of the Indian market,” he said.
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