A department of banking operations circular (DBOD) issued on that day in 1991 had barred banks from selling securities without actually holding them in their investment account at the time of sale. In effect, this was to prevent short-selling in GoI-Secs.

"This restriction", says the RBI in a recent circular, "is inhibiting banks from selling Goi-Secs allotted in the auctions for primary issues on the day of the auctions. It has been decided to remove the said restriction in respect of GoI-Secs by permitting banks to sell them after they have been allotted".

The RBI, however, has qualified this freedom. It has barred banks from using brokers for same-day securities sales after allotment at primary auctions. "The sale deal should be entered into directly without the involvement of broker/s", says the RBI.

And this is not all. "The contract for sale can be entered into only once by the allottee bank on the basis of an authenticated allotment advice issued by the RBI", adds the circular.

This latest circular still underscores the point: "No sale transactions should be put through without actually holding the security in its investment account -- under no circumstances".

The RBI has also put out strict operational guidelines while permitting banks to sell GoI-Secs: "For same-day post-auction sales, banks have got to place concurrent and relative audit reports of such deals before their executive directors or chairman and managing directors every month. A copy of the same is also to be sent to the RBI's department of supervision".

To sum up: banks cannot use a broker for such deals. A bank cannot put through a deal through on the NSE's wholesale debt segment on that day. It can only be bilateral -- between banks. And if it is so, it can only be "once".

Bankers were of the view this kind of restrictions will also have to eventually go if trades after auction are to pick up. Said a dealer: "Even in a bilateral deal, to the extent that the RBI says that a contract for sale can be entered into only `once', a big state-run bank can never transact as they usually bid and tend to get allotted large amounts at the primary auction, and this cannot be off-loaded through a single deal".