The Reserve Bank of India is planning to permit lending and borrowing of Government Securities (G-secs) as part of its ongoing endeavour to further develop the G-Secs market.

The central bank said the move will provide investors with an avenue to deploy their idle securities, enhance portfolio returns and facilitate wider participation.

“This measure will also add depth and liquidity to the G-sec market; aid efficient price discovery; and work towards a smooth completion of the market borrowing programme of the centre and states,” said the RBI in a statement.

RK Gurumurthy, Head-Treasury, Dhanlxmi Bank, said: “The G-Sec market should see improving liquidity with the announcement of lending/borrowing of G-Secs. Is it a precursor to the other much awaited global index inclusion announcement? It is too early to say.”

Market hours extended

As part of RBI’s gradual move towards normalising liquidity and market operations, it has decided to restore market hours for the G-Sec market to the pre-pandemic timing of 9 am to 5 pm (from the current 9 am to 3.30 pm).