RBI Monetary Policy: Central Bank Restores Trading Hours, Allows Lending And Borrowing Of Govt Securities

The trading hours for various markets regulated by the RBI were amended in 2020 in view of the operational dislocations and elevated levels of health risks posed by Covid-19

Shaktikanta Das said that this measure will also add depth and liquidity to the G-sec market; aid efficient price discovery; and work towards a smooth completion of the market borrowing programme of the Centre and states. ( Image Source :Twitter/RBI )

The Reserve Bank of India (RBI) on Wednesday announced the restoration of the market hours for the Government Securities market to the pre-pandemic timing of 9 am to 5 pm. The central bank also permitted lending and borrowing of G-secs. The RBI said that this will provide investors with an avenue to deploy their idle securities, enhance portfolio returns, and facilitate wider participation. 

RBI Governor Shaktikanta Das said, "As part of our gradual move towards normalising liquidity and market operations, it has now been decided to restore market hours for the Government Securities market to the pre-pandemic timing of 9 am to 5 pm. Moreover, as part of our ongoing endeavour to further develop the government securities market, we propose to permit lending and borrowing of G-secs."

"This measure will also add depth and liquidity to the G-sec market; aid efficient price discovery; and work towards a smooth completion of the market borrowing programme of the centre and states," Das added. The trading hours for various markets regulated by the RBI were amended in 2020 in view of the operational dislocations and elevated levels of health risks posed by Covid-19. 

The RBI in a separated press releases said, "Restoration of market hours in a phased manner was commenced with effect from November 9, 2020, and market hours in respect of call/notice/term money, market repo and tri-party repo in government securities, commercial papers, certificates of deposit and rupee interest rate derivatives traded outside the recognised stock exchanges have since been restored to pre-pandemic level."

The new announcement will come into effect on February 13, 2023.

After three days of deliberations the RBI's Monetary Policy Committee, headed by Governor Shaktikanta Das, on Wednesday announced a 25 basis point (bps) hike in the repo rate to 6.5 per cent. Maintaining an accommodative stance, the central bank maintained its commitment to fight inflation.