Monday, September 19, 2016

RBI opens up bond market

RBI proposed to allow listed companies to lend money to banks through repo market mechanism,
essentially overnight money. The central bank also proposed allowing listed companies to lend longer tenure money to banks through the repo market mechanism. This will have an impact on interest rates, the bond market, and liquidity in the banking system.

New measures:-

  • Allows banks to raise money through masala bonds
  • Allows entities exposed to exchange rate risk hedge up to $30 million.
  • Pushes firms to access bond market for their funding needs beyond a limit.
  • Allows FPIs to trade on NDS-OS and directly in corp bond market.
  • Proposes to accept corporate bonds in repo


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