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STCI chief calls for changes in short-term interest rates

The monetary authorities should undertake periodical adjustments in the short-term interest rates instead of one single dose of adjustment to limit the adverse impact on money and gilts markets, according to Securities Trading Corporation of India chairman Deepankar Basu.

Speaking at the company's annual general meeting in Bombay today, Basu suggested that the Reserve Bank of India could quote its buying price under the open market operations window for some benchmark dated securities to give some measure of confidence to the holder of gilts.

STCI, which is an active trader and market maker in the government securities market apart from providing liquidity support to the call money market, has recorded a net profit of Rs 983.6 million for the financial year 1997-98 as against Rs 606.2 million the previous year. The board of directors has declared a dividend of 100 per cent.

Basu pointed out that the secondary market has acquired a good depth and even larger stocks of gilts can be unloaded by sellers with relative ease without causing a large impact on gilt prices. He added that the government's borrowing programme would be large on account of large redemptions of gilts due in the next five years.

UNI