• Market Stabilisation Scheme (MSS) has been introduced, which has expanded the instruments available to the Reserve Bank for managing the enduring surplus liquidity in the system. • Effective April 1, 2006, RBI has withdrawn from participating in primary market auctions of Government paper. • Banks have been permitted to undertake primary dealer business while primary dealers are being allowed to diversify their business.
• Short sales in Government securities is being permitted in a calibrated manner while guidelines for ‘when issued’ market have been issued recently. Increase in Instruments in the Government Securities Market • 91-day Treasury bill was introduced for managing liquidity and benchmarking. Zero Coupon Bonds, Floating Rate Bonds, Capital Indexed Bonds were issued and exchange traded interest rate futures were introduced.