What changed
RBI issued a master circular consolidating all existing guidelines on call/notice money market operations issued up to June 30, 2008. This does not introduce new rules but brings together all previous instructions into one document for easier reference. The circular is available on the RBI website.
What it means for you
Banks and primary dealers now have a single reference document for call/notice money market rules, reducing the need to track multiple circulars. Prudential limits on borrowing and lending remain unchanged, with scheduled commercial banks capped at 100% of capital funds (fortnightly average) for borrowing and 25% for lending. Non-bank institutions remain excluded from this market since August 2005.
What you must do
- Review the master circular to ensure your institution's call/notice money market operations comply with all consolidated guidelines.
- Update internal policies and training materials to reference this master circular as the single source of rules.
- Verify that your treasury team adheres to the prudential limits on borrowing and lending as per the circular.
- Ensure reporting formats and dealing session timings (5:00 pm weekdays, 2:30 pm Saturdays) are followed.
Who it affects
Scheduled commercial banks (excluding RRBs), Co-operative banks (State, District Central, Urban), Primary dealers
What are the prudential borrowing limits for scheduled commercial banks in the call/notice money market?
On a fortnightly average basis, borrowing should not exceed 100% of capital funds (Tier I + Tier II capital from the latest audited balance sheet). However, on any single day during a fortnight, borrowing can go up to 125% of capital funds.
Are non-bank institutions allowed to participate in the call/notice money market?
No, non-bank institutions have not been permitted in the call/notice money market since August 6, 2005. Only banks (excluding RRBs) and primary dealers can participate.
What is the dealing session timing for call/notice money market transactions?
Deals can be done up to 5:00 pm on weekdays and 2:30 pm on Saturdays, or as specified by RBI from time to time.