Reserve Bank of India Governor Sanjay Malhotra expressed concern about “asymmetries which arise on occasions between different money market rates – the rate at which RBI provides liquidity, the call money rate, the market repo rate and TREPS (tri-party repo dealing system) rate”.
The call money rate is an overnight interest rate at which banks and other financial institutions lend and borrow from each other. When the RBI cuts interest rates or injects liquidity, it can push down the call money rate, transmitting the central bank's policy move to the system.
The governor also called for deepening of India's government securities market and improving liquidity and pricing by increasing participation from various stakeholders.
There is also a need for more proactive management of risks by different stakeholders in the derivatives market, enhancing market depth, increasing the diversity of views and fostering greater competition and efficiency, he said. ($1=85.4290 Indian rupees)
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