More NBFCs allowed to trade on RBI's gilt trading platform

MONETARY POLICY MID-TERM REVIEW 2007-08/ MARKETS

I a move that will help systemically important non-deposit taking NBFCs (which have an asset size of Rs 100 crore and above), the RBI has allowed them to use the negotiated dealing platform for trading in government securities.

RBI in its monetary policy has said, 'systemically important non-deposit taking NBFCs (NBFC-ND-SI)' to be considered as 'qualified entities' for accessing the Negotiated Dealing System-Order Matching (NDS-OM) using the Constituents Subsidiary General Ledger route (CSGL route).

Says Pradeep Madhav, managing director of STCI Primary dealer, "With this move, the systemically important non deposit taking NBFCs can come in as a constituent SDL account holder with any primary dealer or bank and they can participate in the NSD-OM market through these entities. The transparency in NSD-OM is high."

However, analysts say that systemically important non-deposit taking NBFCs do not have a large treasury portfolio and this measure is just an enabler.

Says KA Menon, chief operating officer, Global Trade Finance, "It will help relatively big NBFCs which are active in direct government securities."