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Reserve Bank of India (RBI) Governor Shaktikanta Das has said the recent wave of financial market reforms spearheaded by the RBI are geared towards establishing a robust foundation for addressing the burgeoning funding needs of the economy, providing cost-effective hedging alternatives, and enhancing competitiveness in global markets. He said ‘Financial market reforms by RBI aimed at providing strong bedrock for markets.’ He stated ‘Retail participation in G-secs through the Retail Direct scheme has been growing. The VRR scheme has attracted interest from FPIs, especially for corporate bonds. In recent months, robust foreign inflows in G-secs have been witnessed. Non-resident participation in OTC derivative markets has increased, adding to liquidity and diversity.’ 

The reform initiatives, spanning various dimensions, have aimed to streamline capital raising, eliminate segmentation between onshore and offshore markets, broaden market participation, foster innovation, fortify market integrity and resilience, and ensure fair conduct by all stakeholders. Das lauded the positive response to regulatory measures, noting the widening participation base across various segments. Foreign inflows into G-secs have surged in recent months, alongside increased non-resident participation in Over-the-Counter (OTC) derivative markets, enriching liquidity and diversity. Notably, convergence in prices and spreads between domestic and overseas markets has been achieved to a considerable extent.

However, he highlighted areas necessitating further attention. He underscored the imperative of expanding the participation of domestic banks in derivative markets, both domestically and offshore, to augment market depth and resilience. He ‘The participation of domestic banks in derivative markets remains limited with only a small set of active market-makers. Participation of Indian banks in global markets is growing but it is quite small. Domestic banks are dealing with market-makers in global markets rather than with end clients and are yet to emerge as market makers of note globally.’