Draft Reserve Bank Of India (Government Securities Lending) Directions, 2023:
The Reserve Bank of India released Draft Reserve Bank of India (Government Securities Lending) Directions, 2023.
- The RBI proposed introduction of securities lending and borrowing in Government Securities (G-sec) with an aim to facilitate wider participation in the securities lending market by providing investors an avenue to deploy idle securities and enhance portfolio returns.
Draft Norms:
- Government Securities Lending (GSL) transactions shall be undertaken for a minimum period of one day and a maximum of 90 days.
- Government Securities issued by the central government excluding Treasury Bills would be eligible for lending/borrowing under a GSL transaction.
- Government securities issued by the Central government (including Treasury Bills) and the state governments would be eligible for placing as collateral under a GSL transaction.
- An entity eligible to undertake repo transactions in government securities, and any other entity approved by the Reserve Bank would be eligible to participate in GSL transactions as lender of securities.
Government Securities:
- A G-Sec is a tradable instrument issued by the Central Government or the State Governments.
- A G-Sec is a type of debt instrument issued by the government to borrow money from the public to finance its Fiscal Deficit.
