Fair pricing for small forex buyers RBI's priority: Governor

MUMBAI: Ensuring fair treatment of smaller and less-sophisticated customers in forex market and increasing retail participation in govt securities (G-Sec/gilt) market were among the central bank’s continuing priorities, RBI governor Sanjay Malhotra has said.

Malhotra was speaking at FIMMDA-PDAI’s annual conference in Bali Friday. He said dwindling liquidity in the call money market, and occasional asymmetries observed between different money market rates require attention of the central bank. He asked banks to ensure that RBI’s liquidity measures are promptly and seamlessly transmitted to the broader market.

The RBI chief said over the past few decades, India has made significant strides in development of financial markets in the country in terms of market infrastructure, liquidity in available products as well as product diversity. “These advancements are a testament to your dedication, innovation, and collaborative efforts,” he said. “Today, we have vibrant financial markets that not only continue to support India’s economic growth but also inspire global confidence.”

Malhotra also said that as global financial markets are evolving rapidly, RBI was continuously monitoring and assessing economic outlook.

Speaking about the country’s G-Sec market , Malhotra said that increasing retail participation in this market had been one of RBI’s continuing endeavour. It has taken several steps in recent years to ensure that sufficient secondary market liquidity is available to retail investors so that they can participate in this market at reasonable prices, he said.

“Liquidity and pricing also need to improve for participants like cooperative banks, pension, and provident funds with smaller deal sizes. Banks and primary dealers may need to play a much more active role to this end,” Malhotra said.

The RBI chief also pointed out that in forex market, the divergence in pricing for small and large customers are far wider than what can be justified by operational considerations. One of the reasons is the reluctance of banks to offer the platform to their customers, he said.

The RBI chief said the central bank has launched its FX Retail, a transparent platform for undertaking forex transactions, through Bharat Connect platform where individuals can purchase US dollars.

Malhotra also warned about the practice of banks associating with unauthorised forex trading platforms.