What changed
RBI issued a master circular consolidating all previous guidelines, instructions, and circulars on PD operations issued up to June 30, 2009. This replaces multiple separate circulars with one unified reference document. Separate guidelines on risk management and capital adequacy for standalone PDs were issued in a companion circular.
What it means for you
Banks and standalone PDs now have a single source for all operational rules, reducing confusion and compliance burden. The circular reinforces RBI's focus on developing a liquid, broad-based government securities market with strong underwriting and market-making capabilities. Banks doing PD business departmentally must follow both PD-specific rules and general banking prudential norms.
What you must do
- Review the master circular and ensure your PD operations comply with all consolidated guidelines.
- Update internal policies and training materials to reference this single circular instead of older scattered instructions.
- For banks with departmental PD units, verify adherence to Section II additional guidelines on books, capital adequacy, and risk management.
- Submit required statements and returns as per Annex II formats without delay.
Who it affects
All standalone Primary Dealers, Banks authorized to undertake PD business departmentally, Compliance and treasury teams in PDs and banks, RBI's financial markets supervision division
Does this master circular introduce new rules or just consolidate existing ones?
It consolidates all existing guidelines issued up to June 30, 2009, into one document. No new rules are introduced; it is a compilation for ease of reference.
Are banks doing PD business departmentally subject to different capital adequacy norms?
Yes. Standalone PDs have separate risk management and capital adequacy guidelines in a companion circular. Banks must follow the extant capital adequacy and risk management rules applicable to banks generally.
What is the objective of the PD system as per this circular?
To strengthen government securities market infrastructure, develop underwriting and market-making outside RBI, improve secondary market liquidity and price discovery, and make PDs effective conduits for open market operations.