Banks not allowed to trade in bonds for infra lending: RBI
Banks not allowed to trade in bonds for infra lending: RBI
Banks will not be allowed to trade bonds issued by other lenders for infrastructure lending that would be exempted from mandatory reserve requirements under the guidelines issued last week, said Reserve Bank of India (RBI) Deputy Governor R Gandhi.
The RBI last week allowed lenders to issue bonds for infrastructure lending, but barred the banks from holding each other's bonds.
"Restriction on cross holding does apply to trading also," Gandhi told Reuters.
Gandhi said the central bank would prefer that these bonds for infrastructure lending attract investors from outside the banking sector.
"The idea is funds to come from outside the banking system," he said.
Dealers had been confused about whether the cross holding restriction also meant that the banks were not allowed to trade in these bonds, given that lenders are crucial market makers in this segment.
"Debt capital market traders in banks will help create liquidity in this market because they are market makers, otherwise liquidity in this segment will not pick up," said a senior dealer at a bank.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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Banks will not be allowed to trade bonds issued by other lenders for infrastructure lending that would be exempted from mandatory reserve requirements under the guidelines issued last week, said Reserve Bank of India (RBI) Deputy Governor R Gandhi.
The RBI last week allowed lenders to issue bonds for infrastructure lending, but barred the banks from holding each other's bonds.
"Restriction on cross holding does apply to trading also," Gandhi told Reuters.
Gandhi said the central bank would prefer that these bonds for infrastructure lending attract investors from outside the banking sector.
"The idea is funds to come from outside the banking system," he said.
Dealers had been confused about whether the cross holding restriction also meant that the banks were not allowed to trade in these bonds, given that lenders are crucial market makers in this segment.
"Debt capital market traders in banks will help create liquidity in this market because they are market makers, otherwise liquidity in this segment will not pick up," said a senior dealer at a bank.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
--
You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group.
To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.
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