RBI’s Strategy to Enhance Financial Market Depth
- The RBI has formed a working group, chaired by R.S. Ratho, to review trading and settlement timings across regulated financial markets.
- Banking leaders, including C.S. Setty (SBI) and Zarin Daruwala (Standard Chartered), support the move, highlighting its potential to enhance price discovery and market liquidity.
- The RBI aims to align domestic practices with global standards, fostering efficiency and competitiveness.
In a strategic move to deepen India’s financial markets, the Reserve Bank of India (RBI) has announced a comprehensive review of trading and settlement timings across markets under its regulations.
This initiative, led by a nine-member working group chaired by Executive Director R.S. Ratho, aims to identify challenges, optimize liquidity, and foster broader participation.
The group is expected to present its recommendations by April 30, 2025.
“The review will ensure better price discovery and broader participation,” said C.S. Setty, Chairman of State Bank of India
Zarin Daruwala, CEO of Standard Chartered Bank (India & South Asia), also emphasized that expanded access to government securities and synchronized market timings could significantly boost liquidity.
Over recent years, the trading landscape has evolved dramatically with the electronification of markets, round-the-clock payment systems, and increased participation by non-residents.
Yet, the fragmented and limited operating hours across segments pose inefficiencies.
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The RBI aims to align domestic practices with global standards by exploring cross-country examples, enhancing market depth, and optimizing trade settlement cycles.
The hidden narrative is RBI's focus on positioning India as a globally competitive financial hub. By addressing frictions in current systems, such as transmission delays and liquidity mismatches, this review could mark a turning point for India's financial market architecture.
The review’s scope is ambitious, but its success hinges on balancing market efficiency with operational costs.
This proactive move signals RBI’s commitment to advancing financial inclusivity and efficiency in an increasingly interconnected global economy.
Edited by Harshajit Sarmah
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