Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday (February 8) said that the central bank will permit lending, borrowing of Government securities to further develop government securities market.

"We propose to permit lending and borrowing of government securities. This will offer investors an avenue to deploy their idle securities, enhance portfolio returns and facilitate wider participation," RBI Governor Shaktikanta Das said in his monetary policy address. "This measure will also add depth and liquidity to the g-sec market," Das added.

What is a Government Security?: As per the RBI, a Government Security  or G-Sec is a tradeable instrument issued by the Centre or the State Governments and acknowledges the Government’s debt obligation. 

Such securities are short-term, generally called treasury bills, with original maturities of less than one year,  or long-term - usually called Government bonds or dated securities with original maturity of one year or more. 

The central bank  has hiked the repo rate by 25 bps to 6.50 percent with immediate effect. With this, Standing Deposit Facility rate adjusted to 6.25 percent from 6 percent; anFacility ratesanding Facilityrates hiked by 25 bps to 6.75 percent.

RBI's Monetary Policy Committee to remain focused on the withdrawal of the accommodative policy. It puts GDP growth estimates at 6.4 percent for 2023-24.

Reacting the development, Bonds fell, with the yield on benchmark ten-year bonds rising by as much as four basis points to 7.36 percent, as the policy likely belied expectations of a dovish pivot, whereas the rupee was trading higher.

RBI  also proposed to extend the Unified Payments Interface  facility to inbound travelers for merchant payments; initially to travelers from G20 countries.

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