Investing in an instrument backed by the government is bound to bring stability and guarantee healthy returns. These securities known as G-secs, are issued by the state to raise debt from the market for infrastructure projects and other investments. Now the Reserve Bank of India has allowed common investors to borrow and lend money against G-secs, and has even increased trading hours for the same.
Market hours which had been cut down to 9:00 am to 3:30 pm during the pandemic, have now been restored to 9:00 am to 5:00 pm. The move seeks to encourage investors to trade idle securities, and attract more investors towards G-secs. Thanks to better pricing, fund raisers by the government will also be executed more seamlessly.
The new guidelines are expected to work in favour of mutual funds and insurers, as they are currently allowed to borrow money against securities only to meet redemptions or not at all. The move also seeks to make borrowing easier after the RBI raised its repo rate by 25 basis points, which analysts are seeing as its last hike for this cycle.
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