The Reserve Bank on Thursday said it would rationalize existing regulations covering different money market products to improve transparency and safety of money markets. The RBI said that 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 needs. Over time, the central bank has issued regulations covering different money market products – call money, repo, commercial paper, certificates of deposit, and other debt instruments with an original maturity of less than one year. “To bring consistency across products in terms of issuers, investors, and other participants, it is proposed to rationalize existing regulations covering different money market products,” it said.
HERE are the RBI observations in a statement on developmental and regulatory policies issued after the Monetary Policy Committee meeting. The directions would improve transparency and safety of money markets, it added. The RBI further said that a foreign exchange trading platform for retail participants would be available to users for transactions from early August 2019. The Clearing Corporation of India
Ltd has now developed the trading platform (CCIL), which users are testing. The central bank has also decided to constitute an internal working group to review the existing liquidity management framework comprehensively, suggest measures to simplify the framework and communicate the RBI’s objectives, quantitative measures, and tool kit for liquidity management. The internal working group is expected to submit its report by July 2019.
