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RBI forms group for suggestions on STRIPS

The Reserve Bank of India has constituted a working group of 12 individuals for suggesting operational and prudential guidelines on separately traded registered interest and principal securities (STRIPS).

The group will be chaired by M R Ramesh, managing director of Clearing Corporation of India Ltd, and other members will be drawn from the market and the central bank, the RBI said in a statement on Wednesday.

The committee is to submit its report by July 31 to the central bank, which plans to permit STRIPS trading in India's debt market.

It will suggest criteria for selecting securities for "stripping" and reconstituting as well as entities that will undertake this operation.

It will also make suggestions about investment classification and valuation of stripped securities, any legal changes required for enabling stripping, including clarifying the eligibility of stripped assets for meeting statutory liquidity ratio requirements.

The SLR is the proportion of deposits banks must invest in government and approved securities. It is currently 25 per cent.

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