Operational Guidelines for Primary Dealers
The Reserve Bank of India (RBI) has outlined regulations and guidelines for Primary Dealers (PDs) in the government securities market.
Eligibility Conditions: Eligible institutions must meet certain conditions to become PDs, including having a minimum net worth and satisfying RBI’s fit and proper criteria.
Role and Obligations: PDs are required to underwrite and bid in primary auctions of government securities, submit client bids, and maintain a minimum inventory of government securities.
Facilities from RBI: PDs are eligible for facilities such as liquidity support and access to RBI’s liquidity window.
Regulation and Supervision: RBI regulates and supervises PDs through returns, on-site supervision, and other measures to ensure compliance with guidelines.
Primary Market Activities: PDs are involved in various primary market activities, including underwriting of dated government securities, bidding in primary auctions of T-Bills/CMBs, and submission of client bids.
The guidelines also outline specific requirements for banks undertaking PD business departmentally, including additional guidelines and annexes.
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Download: Master Direction – Operational Guidelines for Primary Dealers (Updated as on November 22, 2018)