RBI Panel Proposes Extending Trading Hours For Call Money Market

No similar changes have been proposed for the trading hours of other financial segments, such as government securities, interest rate derivatives, or the foreign exchange market.

The intention behind this recommendation is to give banks greater flexibility in managing their short-term funds, particularly in alignment with the needs of real-time payment systems

Source : PTI

A Reserve Bank of India (RBI) working group has proposed an extension of trading hours in the call money market, recommending that operations continue until 7 PM, rather than closing at 5 PM as they currently do.

The intention behind this recommendation is to give banks greater flexibility in managing their short-term funds, particularly in alignment with the needs of real-time payment systems, reported IANS.

The suggestion, however, is limited to the call money market alone. No similar changes have been proposed for the trading hours of other financial segments, such as government securities, interest rate derivatives, or the foreign exchange market.

This working group was chaired by Radha Shyam Ratho, Executive Director at the RBI. It's formation was first disclosed during the RBI’s monetary policy review held in  this year.

Surge in Market Activity Backs Demand for Longer Hours

According to the group’s findings, standalone primary dealers (SPDs) had formally requested extended trading hours in the call money segment. They also proposed that the reporting window, including for cancelled trades, remain open until 7:30 PM.

The group’s report pointed to a substantial increase in activity in the overnight money market over the last ten years. From 2014-15 to 2024-25, the annual turnover surged from Rs 281.37 lakh crore to Rs 1,324.05 lakh crore. During the same period, the daily average turnover grew from Rs 1.17 lakh crore to Rs 5.52 lakh crore, the study showed.

This significant growth was largely driven by the collateralised portion of the market, where turnover soared from Rs 245.27 lakh crore to Rs 1,296.62 lakh crore. Meanwhile, the uncollateralised call money market witnessed a decline, with turnover falling from Rs 36.10 lakh crore to Rs 27.42 lakh crore.

Limited Participation in the Call Money Market

The call money market remains exclusive to banks and standalone primary dealers, both of which have access to the RBI’s liquidity adjustment facilities, the report pointed out. Among the participants, co-operative banks are the primary lenders, while SPDs are the primary borrowers.