What changed
RBI replaced the July 18, 2006 Master Circular with an updated version dated July 2, 2007, incorporating all subsequent changes and new instructions. The circular consolidates guidelines on underwriting, bidding, short-selling, risk management, and corporate governance for PDs. Separate circulars cover banks undertaking PD business and risk management/capital adequacy.
What it means for you
Primary Dealers now have a single reference document for all operational norms, reducing ambiguity. The update ensures PDs align with RBI's latest expectations on market making, underwriting, and prudential controls. Banks with PD departments must also refer to the separate circular for their specific obligations.
What you must do
- Review the updated Master Circular and ensure all PD operations comply with the consolidated guidelines.
- Acknowledge receipt of the circular to RBI as instructed.
- Cross-reference the separate circulars for banks undertaking PD business and risk management/capital adequacy.
- Update internal manuals and training materials to reflect the July 2, 2007 guidelines.
Who it affects
All standalone Primary Dealers, Banks authorized to undertake PD business departmentally, RBI's Internal Debt Management Department
Does this circular replace all previous PD guidelines?
Yes, this Master Circular consolidates all current instructions as of July 2, 2007, superseding the July 18, 2006 version. However, separate circulars exist for banks doing PD business and for risk management/capital adequacy.
Are banks that act as PDs covered by this circular?
This circular applies to all PDs, but banks undertaking PD business have a separate Master Circular (IDMD.PDRS.02/03.64.00/2007-08) issued on the same date.
What are the key areas covered in this updated circular?
The circular covers underwriting, bidding in auctions, short-selling, investment guidelines, prudential controls, corporate governance, and anti-money laundering measures, among others.