Context

The Reserve Bank of India came out with draft norms (Reserve Bank of India (Government Securities Lending) Directions, 2023) for lending and borrowing of government securities with wider participation in the securities lending market.

About

Key-highlights of the Draft

• Government Securities Lending (GSL) transactions shall be undertaken for a minimum period of one day and a maximum period of ninety days.
• Government securities issued by the central government excluding Treasury Bills would be eligible for lending/borrowing under a GSL transaction. 
• Government securities issued by the central government (including Treasury Bills) and the state governments would be eligible for placing as collateral under a GSL transaction.
• An entity eligible to undertake repo transactions in government securities, and any other entity approved by the Reserve Bank would be eligible to participate in GSL transactions as lender of securities. 

What is Government Security (G-Sec)?

• A Government Security (G-Sec) is a tradable instrument issued by the Central Government or the State Governments.
• It acknowledges the Government's debt obligation.