What changed
RBI issued a master circular consolidating all previous guidelines on bank PD operations in the government securities market. It incorporates changes since the October 2006 circular and provides a single reference document. The circular lists all consolidated circulars in Appendix IV.
What it means for you
Banks with PD business now have a unified set of operational guidelines, simplifying compliance. The eligibility criteria remain unchanged, ensuring only financially sound banks can participate. This consolidation reduces ambiguity and helps banks streamline their PD operations and reporting.
What you must do
- Review the master circular and ensure your bank's PD operations comply with all consolidated guidelines.
- Verify your bank meets the eligibility criteria: net owned funds >= Rs.1000 crore, CRAR >= 9%, net NPAs < 3%, and profit for last 3 years.
- Submit required statements and returns as per Appendix II of the circular.
- Acknowledge receipt of the circular to RBI as instructed.
Who it affects
Scheduled commercial banks (excluding RRBs) undertaking or proposing PD business, Bank-PDs with departmental PD operations, Indian banks with PD subsidiaries merging into departmental business, Foreign banks in India taking over PD business from group companies
What are the minimum eligibility criteria for a bank to apply for a PD licence?
Banks must have net owned funds of at least Rs.1000 crore, CRAR of 9% or more, net NPAs below 3%, and a profit-making record for the last three years.
Does this circular apply to Regional Rural Banks (RRBs)?
No, the circular explicitly excludes RRBs and applies only to all other scheduled commercial banks.
Where should banks apply for PD authorisation?
Eligible banks should first approach the Chief General Manager, DBOD, RBI, Central Office, Mumbai for in-principle approval, then apply to the Chief General Manager, IDMD.