Financial Daily from THE HINDU group of publications
Tuesday, Mar 30, 2004
Financial Daily from THE HINDU group of publications Tuesday, Mar 30, 2004 |
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Money & Banking
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Govt Bonds G-sec deals to shift to new settlement mode Our Bureau
Mumbai , March 29 THE settlement mode of Government securities transactions, now carried out through the Clearing Corporation of India, will be shifted to the Delivery Versus Payment-III (DVP-III) mode effective April 2. With this, each security will be deliverable or receivable on a net-basis for a particular settlement cycle against the current system of gross settlement of securities under the DVP-II mode, according to an RBI release. These measures are expected to improve the liquidity in Government securities market and also reduce the price risk of market participants, the release said. With the new guidelines enabling rollover of repos, non-banks' movement away from the call/notice money market would be facilitated and banks would also be enabled to reduce their dependence on the call notice money market, the apex bank said. RBI has also cautioned that any violation noticed in adherence to the conditions it has stipulated would attract penalties now applicable to the bouncing of subsidiary general ledger (SGL) forms, besides attracting further regulatory action as deemed necessary, even if the deal has been settled because of the netting benefit under DVP III. In the mid-term review of the monetary and credit policy for the year 2003-04, as on November 3, 2003, RBI had permitted the sale of a Government security already contracted for purchase subject to conditions.
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