According to RBI spokesperson, a final view is still awaited, however, according to market sources, the clearance is likely to come in with the lights of Diwali.

Interestingly, according to insiders, some of the BSE directors had pursued the RBI representative to help expedite the clearance at the governing board meeting held in the last week of July. It may be recalled that in April 1998, the RBI had forwarded the issue to the Securities and Exchnage Board of India (Sebi). And Sebi, in turn, had appointed Wipro to vet the online software designed by BSE, and passed on the clearance to RBI.

For online trading in government securities the exchange had sought RBI permission specifically since the exchange needed to open an SGL account with the central bank.

It is also learnt that since RBI representatives were not convincedabout the transparency in trades, they forwarded the issue to Sebi for being cleared. The ban on dealing in gilt-edged securities and government paper was on the grounds of lack of transparency in trades.

Opening of a SGL account with the RBI enables the institution to deal in government securities. Such institutions are also expected to open current accounts with the RBI to deal in the government dated paper and other debt instruments, considering the fact that the deals are transacted on delivery versus payment schedules.

BSE's debt market platform coined as G-Segment by the exchange was developed in house, way back in the last quarter of 1997 and was meant to be only a reporting software.

However, BSE's top brass explained that the exchange plans to work on the software to implement it on an online basis once the segment kicks off its operations. This would also mean flashing of yield and maturity specifics about the particular instrument traded.

This, according to sources, would be the first steptowards the re-introduction of trading in government dated paper or debt instruments after it was banned in the wake of the 1992 securities scam.

After the 1992 scam, the BSE brokers were prohibited from trading in government dated securities. Further, the banks were also not allowed to transact any such deals on behalf of any BSE broker.

Earlier, it was learnt that about six BSE brokers had made an application to the RBI for opening of SGL account, which was set aside by RBI on the grounds that individual brokers though formed into a corporate entity will not be allowed to trade in government securities.

However, the senior officials of BSE maintain that their approach would be to get an SGL account for the clearing house which would enable every member of the exchange to avail of the trading rights in government securities.

Presently, Bank of India is operating as the clearing bank for the exchange's capital market operations. The exchange has also forwarded a proposal seeking RBI's nod forapproaching the SBI to act as the clearing house for trading in government securities.