riskXpress.com will launch on Thursday an online platform for co-operative banks interested in trading in government securities. The platform, christened coop.riskexpress.com, will be a similar to the 'negotiated dealing system' available to commercial banks and primary dealers.
Bikram Sen, chief executive officer, riskXpress, said 30 co-operative banks have already registered with the platform. In the new system, settlement of deals will be done through banks which have the constituent statutory general ledger (CSGL) and current account with the Reserve Bank of India.
According to Sen, all activities of coop.riskexpress.com will be reported to the Reserve Bank of India (RBI) at the end of the day. In future, the platform will be extended to regional rural banks as well.
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Sen said: "In an informed market like Mumbai, phone-based trading is possible and may be more efficient. But, for co-operative banks based in the remote suburbs, it is difficult to get the deals done at market rates over the phone. The new system is expected to provide them a transparent price discovery mechanism and will reduce the cost of intermediation as well."
The Reserve Bank of India has recently made it mandatory for co-operative banks to invest 25 per cent of their net demand and time liabilities in government securities. Hitherto, these banks could place deposits with other co-operative banks to meet their SLR obligations. The changed rule has necessitated co-operative banks to invest and manage a government security portfolio in excess of Rs 10,000 crore.