The modifications would enable sale of government securities on the day of purchase, reducing the price risk and improving the liquidity in government securities market. The changeover would also enable rollover of repos, facilitate non-banks to move away from the call money market and also enable banks to reduce their dependence on the call money market.
Indirect impacts on smaller institutions  However, subsidiarity and proportionality notwithstanding, smaller banks should not complacently assume that the direct impact of the SSM on them will remain contained. It is quite conceivable that the change in the structure of supervision will also have indirect effects across the entire banking landscape.