MUMBAI, Feb 4: The National Stock Exchange (NSE) has decided to directly invest its funds in dated government securities and treasury bills instead of routing it through Canara Bank.The exchange has decided to do away with the existing arrangement of routing deals through Canara Bank following the RBI clearance which will enable it to operate the special general ledger-I (SGL-I) facility.
NSE has recently been allowed its own SGL-I as well as SGL-II facility by the RBI. ``It is better to invest our funds through our own SGL facility rather than seek outside help which had been necessitated in the past for want of an SGL-I facility,'' said a top NSE official. ``Now that we have an SGL-I facility in place, we would be able to park our floating funds in the highly liquid T-bills segment and part of the surplus fund portfolio in government securities,'' said the official.
The move comes as a boost to the exchange which has, on account of its policy of not investing funds in either the equity markets orprivate sector debt instruments, been deprived of keeping a balanced investment portfolio in the past. This, apart from bank deposits, left only the highly illiquid public sector bonds market open to the exchange.
``We will now be able to handle our funds more effectively and earn better returns ,'' said the official. NSE is banking on a number of corporates coming in to avail of the SGL facility which the exchange will shortly start offering. ``These days banks are no longer offering cash credit facility which enabled a corporate to return the loan amount to the bank if it suddenly had a surplus and thus save on interest. Banks are now only offering loans which are to be returned on a fixed-installment basis. In the event of a corporate suddenly being flush with funds, it does not have an avenue to invest this amount. The facility extended by NSE would enable corporates to invest their money in government securities and T-bills,'' said the official.
The NSE is working out an arrangement with the NSDL tojointly offer the service. NSDL, too, has been offered the SGL-II facility.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
