Home › Circulars › RBI/2010-11/224

RBI raises ICD limit for standalone PDs to 75% of NOF

Current · Source: Reserve Bank of India · RBI/2010-11/224 · issued 01 Oct 2010 · ~2 min read

Quick answerRBI has increased the inter-corporate deposit (ICD) ceiling for standalone primary dealers from 50% to 75% of net owned funds (NOF), effective immediately. PDs can now raise ICDs based on funding needs, removing the earlier restriction on using ICDs only sparingly.

The rule, in the simplest words

Standalone Primary Dealers (PDs) can now borrow up to 75% of their Net Owned Funds (NOF) through Inter-Corporate Deposits (ICDs) – up from 50% before.
PDs can raise ICDs whenever they need money, not just 'sparingly' as the old rule said.
All ICDs must be for at least one week, and if borrowed from a related party (like a parent company), the price must be fair and disclosed in financial reports.
PDs must follow Asset-Liability Management (ALM) rules and cannot lend money in the ICD market – only borrow.
The new limit is based on NOF as of March 31 of the previous financial year.

How it plays out — a real example

Ravi, a treasury officer at a standalone PD in Mumbai, checks the firm's NOF from last March and sees it's ₹100 crore. He now knows he can borrow up to ₹75 crore via ICDs to manage a sudden liquidity need, instead of the old ₹50 crore limit. He quickly arranges a one-week ICD from a corporate partner, ensuring the rate is fair and the deal is recorded for the board's policy update.

What changed

The RBI revised paragraph 3.6 of the Master Circular on Operational Guidelines to Primary Dealers, effective October 1, 2010. The ICD borrowing limit for standalone PDs was raised from 50% to 75% of NOF as at end-March of the preceding financial year. The earlier condition that ICDs should be used 'sparingly' and not as a continuous source of funds has been removed, allowing PDs to raise ICDs as per their funding needs.

What it means for you

Standalone PDs now have greater flexibility to raise short-term funds through ICDs, which can help them manage liquidity more efficiently. The higher cap reduces reliance on other costlier funding sources, but PDs must still adhere to ALM discipline and board-approved policies. The removal of the 'sparingly' clause signals RBI's comfort with ICDs as a regular funding tool, though the prohibition on placing funds in the ICD market remains.

What you must do

Update your board-approved ICD policy to reflect the new 75% of NOF ceiling and remove any reference to 'sparing use' or 'not a continuous source'.
Ensure ICD borrowings do not exceed 75% of NOF as at end-March of the preceding financial year.
Maintain a minimum tenor of one week for all ICDs and continue arms-length pricing for related-party deposits.
Disclose all related-party ICD transactions in financial statements and comply with ALM norms.
Do not place any funds in the ICD market; the prohibition remains unchanged.

Who it affects

All standalone primary dealers (PDs) in India, Treasury and ALM teams of standalone PDs, Board of directors of standalone PDs

❓ Common questions

Regulatory timeline

Stated effective date effective October 1, 2010
Decoded by BankPulse 2026-06-19 04:08 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the new ICD limit for standalone PDs?

The ceiling has been raised from 50% to 75% of net owned funds (NOF) as at end-March of the preceding financial year.

Can PDs now use ICDs as a regular funding source?

Yes, the earlier restriction that ICDs should be used 'sparingly' and not as a continuous source has been removed. PDs can raise ICDs based on their funding needs.

Are there any new compliance requirements?

No new requirements beyond existing ones: board-approved policy, minimum one-week tenor, arms-length pricing for related parties, disclosure in financial statements, and ALM discipline. The prohibition on placing funds in the ICD market continues.

📜 Read the original circular — full text as issued by RBI

RBI/2010-11/224

 IDMD.PCD.No. 20/14.03.05/2010-11 

 October 1, 2010 

 All Standalone Primary Dealers

 Dear Sir

 Raising resources through Inter Corporate Deposits (ICDs) 

 Please refer to paragraph 3.6 of the Master Circular RBI/2010-11/81 IDMD.PDRD.01/03.64.00/2010-11 dated July 1, 2010 on Operational Guidelines to Primary Dealers allowing standalone PDs to raise ICDs to the extent of 50 per cent of their net owned funds (NOF) subject to adherence to other terms and conditions.

 2. The above guidelines have been reviewed and it has been decided to permit the standalone PDs to raise funds through ICDs upto 75 per cent of their NOF as at the end of March of the preceding financial year. Further, standalone PDs are allowed to raise ICDs depending on their funding needs. Accordingly, paragraph 3.6 of the Master Circular ibid is amended as under:

 Existing paragraph: 

 3.6 Inter-Corporate Deposits 

 3.6.1 ICDs may be raised by PDs sparingly and should not be used as a continuous source of funds. After proper and due consideration of the risks involved, the Board of Directors of the PD should lay down the policy in this regard, which among others, should include the following general principles:

 i. While the ceiling fixed on ICD borrowings should in no case exceed 50 per cent of the NOF as at the end of March of the preceding financial year, it is expected that actual dependence on ICDs would be much below this ceiling.

 ii. ICDs accepted by PDs should be for a minimum period of one week.

 iii. ICDs accepted from parent/promoter/group companies or any other related party should be on "arms length basis" and disclosed in financial statements as "related party transactions".

 iv. Funds raised through ICDs are subject to ALM discipline.

 3.6.2 PDs are prohibited from placing funds in ICD market.

 Revised paragraph: 

 3.6 Inter-Corporate Deposits 

 3.6.1 ICDs may be raised by PDs as per their funding needs. After proper and due consideration of the risks involved, the Board of Directors of the PD should lay down the policy in this regard, which among others, should include the following general principles:

 i. The ICD borrowings should in no case exceed 75 per cent of the NOF as at the end of March of the preceding financial year.

 ii. ICDs accepted by PD should be for a minimum period of one week.

 iii. ICDs accepted from parent/promoter/group companies or any other related party should be on "arms length basis" and disclosed in financial statements as "related party transactions".

 iv. Funds raised through ICDs are subject to ALM discipline.

 3.6.2 PDs are prohibited from placing funds in ICD market.

 3. The above guidelines are effective from the date of this circular.

 Yours faithfully

 (K.K Vohra)

 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/224 · issued 01 Oct 2010. The plain-English explanation above is BankPulse’s own independent summary.

🧰 Tools — save, print, templates & related

🛠 Banker’s toolkit — checklists & reply templates →

Related circulars · Internal Debt Management

RBI Auction of State Government Securities RBI Buyback of Government Securities: ₹20,000 Crore Auction RBI Buyback Auction Results for Government Securities RBI Buyback Auction Results for Government Securities State Govt Securities Auction Results – July 28, 2026

Browse all departments →

Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All standalone primary dealers (PDs) in India, Treasury and ALM teams of standalone PDs, Board of directors of standalone PDs), your first concrete step on “RBI raises ICD limit for standalone PDs to 75% of NOF” is: “Update your board-approved ICD policy to reflect the new 75% of NOF ceiling and remove any reference to 'sparing use' or 'not a continuous source'.” (RBI issued this 01 Oct 2010).

Circular: RBI/2010-11/224 -- RBI raises ICD limit for standalone PDs to 75% of NOF
Issued: 01 Oct 2010
Action required: Update your board-approved ICD policy to reflect the new 75% of NOF ceiling and remove any reference to 'sparing use' or 'not a continuous source'.
Action required: Ensure ICD borrowings do not exceed 75% of NOF as at end-March of the preceding financial year.
Action required: Maintain a minimum tenor of one week for all ICDs and continue arms-length pricing for related-party deposits.
Action required: Disclose all related-party ICD transactions in financial statements and comply with ALM norms.
Action required: Do not place any funds in the ICD market; the prohibition remains unchanged.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…

BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6024&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.