Bond dealers keen to raise funds via ECBs

In the run-up to the slack season Credit Policy, bond dealers have asked the Reserve Bank of India to permit them to raise funds through external commercial borrowings and enable them to trade in international securities.

In a memorandum to RBI, the primary dealers in government securities have also asked the central bank to allow them to invest in commodities market.

"As India prepares to integrate with global markets, it is necessary to build trading capabilities in international securities. As India holds huge forex reserves, it is appropriate to allow primary dealers to hold and manage foreign currency assets," a bond dealer told PTI, adding primary dealers have asked RBI to issue guidelines in this regard.

Apart from international securities, primary dealers suggested that RBI should provide them "limited-purpose" licence to deal in forex, especially inter-bank spot and forward markets, derivatives like currency swaps and to hold overnight positions as banks do.

Although PDs are allowed to borrow foreign currency out of FCNR(B) funds of banks, the bond dealers now want RBI to allow them to raise money through ECBs.

"Short-term ECBs should be allowed as funding sources for primary dealers within the same limits as FCNR(B) loans allowed at present," they said.