Mumbai: The Reserve Bank of India (RBI) has banned all transactions in physical form with brokers. This ban is imposed on all RBI-regulated entities with immediate effect.

In a circular, the RBI said: No further transactions by a regulated entity should be undertaken in physical form with any broker with immediate effect.

The entities regulated by the RBI, which includes financial institutions, primary dealers, cooperative banks, RRBs, local area banks, non-banking financial companies, should necessarily hold their investments in government securities either in SGL or CSGL and SCHIL or in a dematerialised account with depositories, the circular stated.

In the light of recent fraudulent transactions in the guise of government securities transactions in physical format by a few cooperative banks with the help of some broker entities, it has been decided to accelerate measures under contemplation for further reducing the scope of trading in physical form, the central bank said.