Reserve Bank of India (RBI) Proposes Opening Term Money Market to NBFCs and Corporates

Key facts

• The Reserve Bank of India (RBI) released draft directions to allow All India Financial Institutions (AIFIs), Non-Banking Financial Companies (NBFCs), and corporates to participate in the term money market for periods between 14 days and one year.
• AIFIs and NBFCs, including Housing Finance Companies (HFCs) but excluding Base Layer NBFCs, are permitted to act as both borrowers and lenders, while corporates are allowed only as lenders.
• The RBI proposed that borrowing by Standalone Primary Dealers (SPDs) through term money and inter-corporate deposits together can reach up to 400 per cent of their net owned funds.
• The borrowing limit for NBFCs and HFCs in the term money market has been set at 200 per cent of their net owned funds as at the end of the previous financial year.
• All eligible participants must obtain membership of the Negotiated Dealing System-Call (NDS-CALL) platform within six months, and all over-the-counter transactions must be reported within 15 minutes.