RBI Expands G-Sec Market with Forward Contracts Implementation

The Reserve Bank of India announced the introduction of forward contracts in government securities, marking a significant expansion of India's debt market instruments. This strategic move follows the central bank's December draft guidelines that allow scheduled commercial banks and primary dealers to act as market-makers. The initiative enables market participants, especially long-term investors, to better manage cash flows and interest rate risks. The framework permits both physical and cash settlement options, with transactions to be conducted in over-the-counter markets. This development comes as part of RBI's broader market reform agenda.

Source: Reserve Bank of India