RBI authorises Morgan Stanley to deal in government bonds

The Reserve Bank of India (RBI) has authorised Morgan Stanley India Primary Dealer Private Limited to undertake trading in government securities and bonds from Monday (20 July 2009).

Morgan Stanley India, the Indian arm of US investment bank Morgan Stanley, said it would start business as a primary dealer from Monday.

Morgan Stanley also announced the appointment of Manjo Kumar Swain as chief executive of Morgan Stanley India Primary Dealer Private Ltd and that it would commence operations in India from Monday.

"The new licence, along with our established non-banking finance business, provides us with a fully integrated onshore fixed income platform in India and enables us to offer a comprehensive suite of services and solutions to our local and global clients," the release said.

Meanwhile, yields on government bonds, which had risen almost 100 bps from levels seen in May, on the back of a series of negative factors, are now seeing sideways and consolidating in the trading range. The increase in fiscal deficit of 0.5 per cent of GDP is expected to translate into higher government borrowing of around Rs50,000 crore, leading to around Rs30,000 crore of additional borrowing in the next couple of quarters.

The liquidity situation in the market continues to remain benign with the system parking more than Rs1,00,000 crore with the RBI on a consistent basis through reverse repo window.