RBI Notifies Government Securities Lending Directions, 2023 | Permits Lending & Borrowing in Govt. Securities
- Blog|News|FEMA & Banking|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 29 December, 2023
Latest from Taxmann
Circular No. RBI/2023-24/97 FMRD.DIRD.No.05/14.03.061/2023-2024, Dated 27.12.2023
Earlier, the RBI vide Statement on Developmental and Regulatory Policies dated 08.02.2023 notified about the introduction of Securities Lending and Borrowing in Government Securities. Later, the RBI introduced draft directions on Government Securities Lending (GSL) & same was kept open for public comments. Based on the comments received, RBI has finalised the Directions.
The entities eligible to participate in GSL transactions as lenders of securities is entity eligible to undertake repo transactions in Government securities in terms of the Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 dated July 24, 2018 and any other entity approved by the Reserve Bank for this purpose.
Further, the Government securities issued by the Central Government excluding Treasury Bills shall be eligible for lending/borrowing under a GSL transaction. Securities obtained under a repo transaction, including through Reserve Bank’s Liquidity Adjustment Facility, or borrowed under another GSL transaction shall also be eligible to be lent under a GSL transaction.
Whereas, the Government securities issued by the Central Government (including Treasury Bills) and the State Governments shall be eligible for placing as collateral under a GSL transaction.
The minimum tenor of a GSL transaction shall be one day and the maximum tenor shall be the maximum period prescribed to cover short sales in terms of the Directions on ‘Secondary Market Transactions in Government Securities – Short Selling’ dated July 25, 2018.
Further, the GSL transactions may be contracted using any mutually agreed trading process/platform, including but not limited to, bilateral or multilateral, quote driven or order driven process, anonymous or otherwise.
All GSL transactions shall settle on a Delivery versus Delivery basis. The first leg of all GSL transactions shall settle either on a T+0 or T+1 basis. Further, all GSL transactions shall settle through Clearing Corporation of India Ltd. (CCIL) or any other central counterparty or clearing arrangement approved by the Reserve Bank for the purpose.
Also, the Securities/collateral under a GSL transaction shall be valued transparently at prevailing market prices in the first leg of the transaction. Whereas, the Haircut/ margins relating to GSL transactions shall be decided by the central counterparty settling the transactions.
Click Here To Read The Full Circular
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
