RBI allows trading in repo of G-Sec contracted for sale

The move comes in the wake of the severe liquidity crunch in the banking system with banks borrowing over Rs1 trillion every day from the special liquidity window on one hand and the increasing government borrowing on the other

Mumbai: The Reserve Bank of India (RBI) on Monday said the repurchase or repo of government securities (G-Secs) that have been contracted for sale will be allowed for transaction as a measure to improve liquidity in the G-Sec market, reports PTI.

“It has now been decided to permit repo of G-Secs (on T+0 basis) that have already been contracted, for sale, for transaction,” an RBI notification said.

The move comes in the wake of the severe liquidity crunch in the banking system with banks borrowing over Rs1 trillion every day from the special liquidity window on one hand and the increasing government borrowing on the other.

The Centre has overshot its market borrowing target by nearly Rs1 trillion (Rs93,000 crore) this fiscal from the budgeted Rs4.17 lakh crore. Already as of end December, the government had borrowed a tad over 92% of its planned borrowing target, according to RBI data.

Last Saturday, RBI deputy governor Subir Gokarn, while denying the increased use of open market operations as a way to help the government borrowing programme, said the central bank will use more OMOs to infuse liquidity into the system.

This is despite the fact the on 24th January, RBI had cut the CRR requirement by 50 basis points (bps), thus releasing Rs32,000 crore into the system daily. The RBI has done OMOs worth nearly Rs90,000 crore so far since November.

“The aggregate objective of OMOs is to put in a certain amount of liquidity into the market and not help the government borrowings,” Mr Gokarn had said, and "the choice of securities is driven by the need to be reasonably certain about achieving the aggregate number.

Earlier, to improve liquidity in the G-Sec market and reduce the price risk on the part of market securities, the RBI has allowed transaction when a sale of G-Sec already contracted for purchase had been entered into by parties.

However, the central bank notification said the contract agreement should be confirmed prior to the transaction and be guaranteed by Clearing Corporation of India or the security is contracted for purchase from the RBI itself.

Previously, any transaction in a G-Sec is allowed only if the party or dealer actually holds that security in its portfolio.

But, now the dealers will be able to transact in a G-Sec if he has entered into a contract for sale or repurchase without actually holding that security at the time of trading.

In another notification, the regulator has modified the monthly report on short-selling to capture the changes in the regulatory changes during the month.

Further, the monthly report on these transactions shall be submitted to the Financial Markets Department by 8th of every month, it added.

 

User

Indiabulls Real Estate, Areva T&D to enter BSE-500 Index

The exchange has also decided to exclude scrips of MBL Infrastructures, Infinite Computer Solutions (India) and Jubilant FoodWorks from BSE-IPO Index from 13th February as these scrips have completed two years of listing

Mumbai: The Bombay Stock Exchange (BSE) on Monday said it has decided to include scrips of Indiabulls Real Estate and Areva T&D India in the BSE-500 index effective from 13th February, reports PTI.

The exchange will exclude scrips of ICSA (India) and Shri Ganesh Spinners from BSE-500 index, a BSE statement said here.

The exchange has also decided to exclude scrips of MBL Infrastructures, Infinite Computer Solutions (India) and Jubilant FoodWorks from BSE-IPO Index from 13th February. These scrips have completed two years of listing.

As per the RBI guidelines for the BSE IPO index, a scrip will be excluded from the index on the second Monday of the month after completion of two years of listing, the release said.

 

User

Tatas to file review petition on SC order on 2G

“TTL had applied for the three licenses way back in June 2006 and this was kept pending for over 18 months until LOIs were finally issued in January 2008. TTL has been advised to file a review petition in the Supreme Court seeking a redressal on this point,” a company statement said

New Delhi: Aggrieved by the cancellation of its three licences by the Supreme Court, Tata Teleservices (TTL) on Monday said it will file a review petition against the order as the company had applied for these licences more than 18 months before the 2008 licensing process began, reports PTI.

TTL’s three licences for Assam, North-East and Jammu & Kashmir were cancelled as part of 122 second generation (2G) licences issued by former telecom minister A Raja in January 2008 on the basis that these were illegal.

“TTL had applied for these three licenses way back in June 2006 and this was kept pending for over 18 months until Letters of Intents (LOIs) were finally issued in January 2008. TTL has been advised to file a review petition in the Supreme Court seeking a redressal on this point,” a company statement said.

At the same time, the company welcomed the apex court’s judgement that spectrum, a scarce national resource, will be allotted through auctions. “It has always been our view that spectrum has value and should be paid for,” it added.

The aberrations in the policy date back to 2001 and have resulted in wrongful allocations, the beneficiaries of which were not before the court. If auction covers spectrum wrongfully-allocated since 2001 and is executed in an equitable manner, without bias in favour of selected operators or specific technologies, it should bring in greater transparency and fair-play into the telecom industry, the statement said further.

It is obvious that in the new dispensation mandated by the Supreme Court to be put in place within four months, there has to be a level-playing field consistent with the paradigm of transparency.

At the time when NTT DoCoMo invested in TTL, TTL had been in operations for over 12 years, already had 17 licences, had reached an annual turnover of Rs6,000 crore, had 3,000 employees, about 100 offices, 33 million subscribers, 60,000 km of fibre, an NLD business, 38% investments in Tata Teleservices (Maharashtra) and 100% investments in its tower subsidiary.

The investment made by its strategic partner NTT DoCoMo was, therefore, not on account of these three licences but on account of TTL’s established position as one of the strong players in the telecom field, apart from its strong Tata brand.

 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)