It is also crucial for bringing about an effective and reliable transmission channel for the use of indirect instruments of monetary control. A notable change was the switch from administered low coupon government borrowings to auctions in government securities at market related rates. Introduction of primary dealers has to some extent improved the liquidity in the secondary market.
Innovative financial instruments were introduced, such as zero coupon bonds, floating rate bonds, capital indexed bonds, securities on which payment is made in instalments, etc. In addition, 14, 91 and 364-day T-bills presented investment avenues for deployment of short-term funds to investors. Counterparty risk in securities settlement has been eliminated with the introduction of Delivery versus Payment system (DVP).