complete information and technical knowhow and thus, lacking expertise in pricing, greater use of non - competitive route could be explored for generating retail demand for iibs. towards this end, we are considering increasing the non - competitive portion from five per cent of the notified amount as applicable to the primary auctions of the central government dated securities to 10 per cent while launching iibs. we are in discussion with the government with regard to issuance of iibs as part of normal market borrowing program and special bonds linked to inflation could be a medium term target. similarly mutual funds could design products based on g - sec to capture investor interests. reserve bank provides liquidity support on any day up to 20 per cent of the outstanding stock of government securities, including treasury bills, held by the gilt funds bis central bankers ’ speeches as at the end of the previous working day, to gilt funds to encourage such funds to create a wider investor base for government securities market. improving access to the market the existing infrastructure for g - sec viz. depository, intermediaries, trading infrastructure is concentrated in mumbai. this has led to the concentration of treasury activities of banks and pds in mumbai. catering to retail investors located across the country, requires establishment and maintenance of a wide distribution network. banks, by having an existing network of branches spread across the country and on a cbs platform, and post offices with a wide geographical presence are well placed to offer investment services to retail investors in the g - sec. this potential must be tapped and leveraged as a distribution channel to cater to retail investors. banks / pds can create designated desks to focus on retail trades. leveraging technology for promoting retail trades with new technologies like internet and wireless communication systems, possibilities for cost - efficient sale and distribution of g - sec are increasing. as such, there is an urgent need to leverage upon technology to provide easy and operationally convenient access to the retail investors. new distribution channels can be contemplated. for example, in singapore bank networks / atms are being used to distribute g - sec. in india, some banks have started on - line trading portals for g - sec. one bank has infact vigorously marketing their product which provides wide accessibility to retail investors in g - sec. the bank is also integrating its portal with the mobile banking platform. other banks / primary dealers may consider similar initiatives for market development. improving liquidity in g - sec market secondary market liquidity in g - sec is limited to a

through stock exchanges can be one of the most feasible options. the reserve bank had also allowed buying and selling of government securities through stock exchanges since 2003 to facilitate easier access and wider participation. trading volumes, however, continue to be very low in the exchanges. the working group on enhancing bis central bankers ’ speeches liquidity in the government securities and interest rate derivatives markets ( chairman : r. gandhi ) [ gandhi committee ] had examined this aspect and had made recommendations to simplify operational procedures for seamless movement of securities from sgl form to demat form and vice versa and permit banks and pds to obtain limited membership of stock exchanges for undertaking proprietary trades in g - sec on the exchanges to promote trading of g - sec on stock exchanges. reserve bank is examining the recommendations in consultation with all the stakeholders. it would be interesting to note that australia recently passed legislation to enable retail trading of australian government securities on the australian stock exchange. the australian government has put a mid – 2013 timeframe for trading to commence. all benchmark bonds issued by the australian government, including treasury bonds and treasury indexed bonds will be available for trading. in india, by improving access to order matching platforms and promoting safe clearing and settlement systems, widening access to retail investors is being pursued with vigour. factors inhibiting retailing of g - sec in the indian context penetration of g - sec to individuals could not be achieved mainly on account of the competition from other instruments, many of them having tax benefits, such as, small savings schemes from the government like savings bonds and national savings certificates ( nscs ). these instruments are targeted at the retail investors and the effective return on these instruments work out to be higher than the yield on marketable securities which have no tax concessions. the predominance of institutional investors and large borrowing needs of the issuer, i. e. “ the sovereign ” resulted in market is characterised by very large transaction size. though we have provided odd lot segment in nds - om for trading in small lot size, there are not many quotes available, thereby discouraging small investors. thus, the present market for g - sec is not well suited to retail / individual investors who trade in small amounts and are generally buy - and - hold investors. moreover, g - sec are not actively traded on stock exchanges. since volatility in prices of fixed - income securities is low vis - a - vis equity, investors generally gain through small changes in prices of debt instruments by committing large