The Reserve Bank on Thursday said it will rationalise existing regulations covering different money market products with a view to improve transparency and safety of money markets.
A well-functioning money market is a crucial link in the chain of monetary policy transmission, apart from being a basic necessity for pricing and liquidity in other financial markets, the RBI said.
The central bank has issued regulations over time covering different money market products – call money, repo, commercial paper, certificates of deposit and other debt instruments with original maturity of less than one year. “With the objective of bringing consistency across products in terms of issuers, investors and other participants, it is proposed to rationalise existing regulations covering different money market products,” it said.
The RBI made the observations in a statement on developmental and regulatory policies issued after the Monetary Policy Committee meeting here. The directions would improve transparency and safety of money markets, it added.
The RBI further said foreign exchange trading platform for retail participants will be available to users for transactions from early August 2019.
The trading platform has now been developed by the Clearing Corporation of India Ltd (CCIL) and is being tested by users.
The central bank has also decided to constitute an internal working group to review comprehensively the existing liquidity management framework and suggest measures to simplify the framework; and clearly communicate the objectives, quantitative measures and tool kit of liquidity management by the RBI.
The internal working group is expected to submit its report by July 2019.