RBI to permit lending, borrowing of gilts; broaden scope for insurers

Post 'short-squeeze' episodes, market had called for more players in security lending

The Reserve Bank of India (RBI) said on Wednesday that it proposed to permit lending and borrowing of government securities, a move that will augment the existing market for special repo transactions.

“The system is expected to facilitate wider participation in the securities lending market by providing investors an avenue to deploy idle securities and enhance portfolio returns. Draft directions will be issued separately for stakeholder comments,” the RBI said in its statement on regulatory and development policies on Wednesday.

In a press briefing after the announcement of the monetary policy statement, RBI Deputy Governor T Rabi Sankar said the