EFFORTS ON TO INCLUDE G-SEC IN GLOBAL INDICES: RBI GUV

“EXPANSION OF THE INVESTOR BASE IS KEY TO FURTHER DEVELOPMENT OF THE MARKET” SHAKTIKANTA DAS,

RBI GOVERNOR

The Reserve Bank of India (RBI) is working closely with the central government to enable international settlement of government securities (G-secs) and incorporation of local bonds into global bond indices to broaden the investor base, said RBI Governor Shaktikanta Das on Tuesday.

He reiterated his stance that the G-sec is a "public good", as it is the benchmark for pricing various instruments in the economy. The RBI'S endeavour has remained an “orderly evolution of the yield curve”, with this in mind.

“The RBI, together with the government, is making efforts to enable international settlement of transactions in G-secs through international central securities depositories,” said Das. “Once operationalised, this will enhance access of nonresidents to the G-sec market, as will the inclusion of Indian G-secs in global bond indices, for which efforts are ongoing,” he said, while delivering his keynote address at the annual event of FIMMDA-PDAI - two bond investor association bodies.

Fixed Income Money Market and Derivatives Association of India (FIMMDA) and Primary Dealers' Association of India (PDAI) were having their 21st annual meeting virtually.

“Expansion of the investor base is key to further development of the market,” said the governor. To widen the investor base, the RBI has introduced a ‘retail direct’ scheme for retail investors, which is expected to tap into existing savings of households towards the safest asset in the country.

He urged the FIMMDAPDAI to focus more on the STRIPS (Separate Trading of Registered Interest and Principal of Securities) segment, so that it gains popularity among such investors.

The RBI governor quoted a Bank for International Settlements study that had found that the G-sec market in India, measured in terms of outstanding stock as a per cent of gross domestic product, is large relative to most Asian peers, and bid-ask spreads among the best.