{"id":7308,"date":"2025-04-19T17:59:52","date_gmt":"2025-04-19T12:29:52","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=7308"},"modified":"2025-04-19T17:59:52","modified_gmt":"2025-04-19T12:29:52","slug":"rbi-governor-flags-global-risks-emphasizes-liquidity-and-market-reform-measures","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/rbi-governor-flags-global-risks-emphasizes-liquidity-and-market-reform-measures\/","title":{"rendered":"RBI Governor Flags Global Risks, Emphasizes Liquidity and Market Reform Measures"},"content":{"rendered":"<h2 class=\"\" data-start=\"338\" data-end=\"430\">Sanjay Malhotra Highlights Risks Amid Resilience at FIMMDA-PDAI Annual Conference in Bali<\/h2>\n<p class=\"\" data-start=\"432\" data-end=\"1011\">India\u2019s economy, though resilient, remains vulnerable to global shocks, according to Reserve Bank of India (RBI) Governor Sanjay Malhotra. Speaking at the 24th FIMMDA-PDAI Annual Conference in Bali, the Governor underlined that while macroeconomic stability has improved, the country\u2019s GDP growth still lags behind aspirational targets. He stressed the need to deepen domestic financial markets and tackle longstanding inefficiencies in liquidity, pricing, and participation across asset classes including government securities (G-Secs), foreign exchange, and term money markets.<\/p>\n<p class=\"\" data-start=\"1013\" data-end=\"1321\">Malhotra reaffirmed that domestic inflation is projected to stay aligned with the 4% target for FY26 and lauded the improvement in the growth-inflation balance following policy interventions. However, he cautioned that global uncertainties and weather-related disruptions continue to pose inflationary risks.<\/p>\n<p class=\"\" data-start=\"1323\" data-end=\"1338\"><strong data-start=\"1323\" data-end=\"1338\">Highlights:<\/strong><\/p>\n<ul data-start=\"1339\" data-end=\"1579\">\n<li class=\"\" data-start=\"1339\" data-end=\"1415\">\n<p class=\"\" data-start=\"1341\" data-end=\"1415\">RBI sees real GDP growth at 6.5% for FY26, still below long-term targets<\/p>\n<\/li>\n<li class=\"\" data-start=\"1416\" data-end=\"1498\">\n<p class=\"\" data-start=\"1418\" data-end=\"1498\">Inflation expected to remain close to 4%, but global and climatic risks remain<\/p>\n<\/li>\n<li class=\"\" data-start=\"1499\" data-end=\"1579\">\n<p class=\"\" data-start=\"1501\" data-end=\"1579\">RBI remains agile, pledging responsive and proactive monetary policy actions<\/p>\n<\/li>\n<\/ul>\n<h2 class=\"\" data-start=\"1581\" data-end=\"1645\">G-Sec Market Liquidity: Structural Inefficiencies and Reforms<\/h2>\n<p class=\"\" data-start=\"1647\" data-end=\"2197\">Despite being globally recognized for liquidity, India\u2019s Government Securities (G-Sec) market is hindered by low turnover ratios and uneven liquidity distribution. Governor Malhotra noted that the annual turnover of dated G-Secs remains just above one (1), and including state government securities pushes this figure below one. Liquidity is concentrated in a narrow set of maturities, while institutional investors such as pension funds and cooperative banks often follow a buy-and-hold strategy, contributing minimally to secondary market activity.<\/p>\n<p class=\"\" data-start=\"2199\" data-end=\"2672\">The top ten institutional investors accounted for nearly one-third of total G-Sec trading turnover in 2024, pointing to high concentration. While the RBI has attempted to democratize market access via initiatives like the <em data-start=\"2421\" data-end=\"2436\">Retail Direct<\/em> platform and its mobile app, broader market participation remains limited. Malhotra urged banks and primary dealers to ensure better price discovery and deal execution for smaller participants, including cooperatives and pension funds.<\/p>\n<p class=\"\" data-start=\"2674\" data-end=\"2689\"><strong data-start=\"2674\" data-end=\"2689\">Highlights:<\/strong><\/p>\n<ul data-start=\"2690\" data-end=\"3014\">\n<li class=\"\" data-start=\"2690\" data-end=\"2754\">\n<p class=\"\" data-start=\"2692\" data-end=\"2754\">G-Sec turnover ratio remains low despite perceived liquidity<\/p>\n<\/li>\n<li class=\"\" data-start=\"2755\" data-end=\"2809\">\n<p class=\"\" data-start=\"2757\" data-end=\"2809\">Top 10 investors account for one-third of turnover<\/p>\n<\/li>\n<li class=\"\" data-start=\"2810\" data-end=\"2877\">\n<p class=\"\" data-start=\"2812\" data-end=\"2877\">Secondary market activity concentrated in short-term maturities<\/p>\n<\/li>\n<li class=\"\" data-start=\"2878\" data-end=\"2949\">\n<p class=\"\" data-start=\"2880\" data-end=\"2949\">RBI promotes retail access via Retail Direct and NDS-OM for brokers<\/p>\n<\/li>\n<li class=\"\" data-start=\"2950\" data-end=\"3014\">\n<p class=\"\" data-start=\"2952\" data-end=\"3014\">Banks and PDs urged to enhance liquidity for small investors<\/p>\n<\/li>\n<\/ul>\n<h2 class=\"\" data-start=\"3016\" data-end=\"3089\">Forex Market: Need for Greater Price Transparency and Retail Inclusion<\/h2>\n<p class=\"\" data-start=\"3091\" data-end=\"3514\">Governor Malhotra voiced concern over the significant pricing disparities between small and large forex customers. He criticized the tepid adoption of the FX-Retail platform, attributing it largely to banks\u2019 reluctance to offer the platform to their clients. Despite existing regulations mandating disclosure of interbank mid-market rates, market-makers have fallen short in providing transparent pricing to retail clients.<\/p>\n<p class=\"\" data-start=\"3516\" data-end=\"3956\">To address this, the RBI recently announced that access to FX-Retail would be enabled through the Bharat Connect platform. A pilot initiative will soon allow individuals to purchase US dollars transparently, with plans for expansion depending on its success. Malhotra called on Authorised Dealers and market participants to fully support the pilot and improve awareness about the risks of engaging with unauthorized forex trading platforms.<\/p>\n<p class=\"\" data-start=\"3958\" data-end=\"3973\"><strong data-start=\"3958\" data-end=\"3973\">Highlights:<\/strong><\/p>\n<ul data-start=\"3974\" data-end=\"4286\">\n<li class=\"\" data-start=\"3974\" data-end=\"4040\">\n<p class=\"\" data-start=\"3976\" data-end=\"4040\">Major price divergence between large and small forex customers<\/p>\n<\/li>\n<li class=\"\" data-start=\"4041\" data-end=\"4109\">\n<p class=\"\" data-start=\"4043\" data-end=\"4109\">FX-Retail platform underutilized due to lack of bank cooperation<\/p>\n<\/li>\n<li class=\"\" data-start=\"4110\" data-end=\"4167\">\n<p class=\"\" data-start=\"4112\" data-end=\"4167\">RBI pushing retail access via Bharat Connect platform<\/p>\n<\/li>\n<li class=\"\" data-start=\"4168\" data-end=\"4219\">\n<p class=\"\" data-start=\"4170\" data-end=\"4219\">New pilot to enable individual dollar purchases<\/p>\n<\/li>\n<li class=\"\" data-start=\"4220\" data-end=\"4286\">\n<p class=\"\" data-start=\"4222\" data-end=\"4286\">Banks urged to counter unauthorized forex trading platform use<\/p>\n<\/li>\n<\/ul>\n<h2 class=\"\" data-start=\"4288\" data-end=\"4342\">Term Money Markets: Persistent Gaps Despite Reforms<\/h2>\n<p class=\"\" data-start=\"4344\" data-end=\"4737\">Despite multiple policy interventions over the years, India\u2019s term money markets remain underdeveloped, particularly in the 3-day to 3-month segment. Governor Malhotra observed that the overnight segment dominates, leaving a structural void in the formation of a robust term yield curve. This impacts the pricing of a wide array of interest rate products, including bank loans and derivatives.<\/p>\n<p class=\"\" data-start=\"4739\" data-end=\"5189\">While substitutes such as Overnight Indexed Swaps (OIS) and Treasury bill yields are used, a reliable term structure benchmark remains absent. Malhotra also pointed out the decline in liquidity within the call money market\u2014used as the operational target of the RBI\u2019s monetary policy. Furthermore, occasional asymmetries between rates across different money market instruments, including call, market repo, and TREPS, complicate monetary transmission.<\/p>\n<p class=\"\" data-start=\"5191\" data-end=\"5416\">The Governor underscored the importance of proactive engagement from banks, which have privileged access to the RBI\u2019s liquidity windows and core market segments, to ensure smooth and timely implementation of policy decisions.<\/p>\n<p class=\"\" data-start=\"5418\" data-end=\"5433\"><strong data-start=\"5418\" data-end=\"5433\">Highlights:<\/strong><\/p>\n<ul data-start=\"5434\" data-end=\"5761\">\n<li class=\"\" data-start=\"5434\" data-end=\"5494\">\n<p class=\"\" data-start=\"5436\" data-end=\"5494\">Term money market (3-day to 3-month) remains undeveloped<\/p>\n<\/li>\n<li class=\"\" data-start=\"5495\" data-end=\"5569\">\n<p class=\"\" data-start=\"5497\" data-end=\"5569\">Absence of risk-free term structure hampers pricing of credit products<\/p>\n<\/li>\n<li class=\"\" data-start=\"5570\" data-end=\"5641\">\n<p class=\"\" data-start=\"5572\" data-end=\"5641\">Liquidity in call money market declining, impacting MIBOR benchmark<\/p>\n<\/li>\n<li class=\"\" data-start=\"5642\" data-end=\"5704\">\n<p class=\"\" data-start=\"5644\" data-end=\"5704\">Discrepancies observed across different money market rates<\/p>\n<\/li>\n<li class=\"\" data-start=\"5705\" data-end=\"5761\">\n<p class=\"\" data-start=\"5707\" data-end=\"5761\">RBI calls for more proactive transmission from banks<\/p>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Sanjay Malhotra Highlights Risks Amid Resilience at FIMMDA-PDAI Annual Conference in Bali India\u2019s economy, though resilient, remains vulnerable to global shocks, according to Reserve Bank of India (RBI) Governor Sanjay Malhotra. Speaking at the 24th FIMMDA-PDAI Annual Conference in Bali, the Governor underlined that while macroeconomic stability has improved, the country\u2019s GDP growth still lags [&hellip;]<\/p>\n","protected":false},"author":4,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1362],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-7308","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-and-economy-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/7308","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=7308"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/7308\/revisions"}],"predecessor-version":[{"id":7310,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/7308\/revisions\/7310"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/7309"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=7308"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=7308"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=7308"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=7308"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}