Banks not allowed to trade in bonds for infra lending: RBI

Tags: RBI, Banking
Banks will not be allowed to trade bonds issued by other lenders for infrastructure

RELATED ARTICLES

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.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Companies of the future must shed old identities to be more meaningful

    In the animal kingdom, the rule is, eat or be eaten; in the human kingdom, define or be defined, as psychiatrist Thomas Stephen Szasz once noted.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

BK Chaturvedi

Corruption law calls for correction

In any country, it is its laws against corruption that ...

Kuruvilla Pandikattu SJ

Believers of the world set to rise

The world is set to become more religious as the ...

Gautam Gupta

The changing face of the fashion world

Indian fashion industry, like every fashion industry in the world, ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture