RBI to monitor trades by firms in debt market

Worried by a surge in trading in debt markets by companies, the Reserve Bank of India (RBI) has directed its supervision team to monitor and survey such trades for the first time, several sources with direct knowledge of the situation said.

The move by the RBI reflects concerns that companies which are building large trading positions in debt and currency markets could pose risks to financial market stability, sources said. Currently, there is a regulatory gray area about who supervises trades by companies in those markets.

"There is a surveillance team which is looking into the deals between banks and corporates. It is easier to get data from the banking side since the Reserve Bank controls them. The team is on the job," said a policymaker directly aware of the developments.

The official declined to specify what specific risks the team was probing. The sources declined to be identified because the information has not been made public.

The RBI was not immediately available to comment.

(Reuters)