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.
- 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.
- 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.