What changed
RBI issued a Master Circular that consolidates and updates all previous instructions on call/notice money market operations issued up to June 30, 2009. This circular brings together all existing guidelines into one document for easier reference by eligible institutions.
What it means for you
Banks and primary dealers now have a single, authoritative reference for call/notice money market rules, reducing confusion from multiple circulars. The prudential limits on borrowing and lending remain unchanged, ensuring continued liquidity management within prescribed capital and deposit-based caps.
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 single circular instead of older individual circulars.
- Monitor borrowing and lending limits against capital funds or aggregate deposits as per the updated prudential limits table.
- Ensure deals are executed within the specified dealing session timings (upto 5:00 pm weekdays, 2:30 pm Saturdays).
- Report all call/notice money market deals on NDS within 15 minutes (if NDS member) or by fax to RBI (if non-NDS member).
Who it affects
Scheduled commercial banks (excluding RRBs), Co-operative banks (State, District Central, Urban), Primary dealers
What are the borrowing limits for scheduled commercial banks in the call/notice money market?
On a fortnightly average basis, borrowing outstanding should not exceed 100% of capital funds (Tier I + Tier II capital from latest audited balance sheet). However, banks can borrow up to 125% of capital funds on any single day during a fortnight.
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 are eligible participants.
How are interest rates determined in the call/notice money market?
Eligible participants are free to decide interest rates. However, calculation of interest payable must follow FIMMDA's Handbook of Market Practices.