What changed
RBI extended direct NDS-OM membership to licensed UCBs and NBFC-ND-SIs under Section 45-I(c)(ii) of the RBI Act. Eligible entities must meet specific financial criteria and obtain a No-Objection Certificate from their respective regulatory department before applying.
What it means for you
This widens the secondary market for government securities by allowing more participants to trade directly. Banks and lenders in these categories can now bypass intermediaries, potentially reducing costs and improving liquidity management. However, compliance with CRAR, net worth, and NPA thresholds is mandatory.
What you must do
- Check if your institution meets the financial criteria: for UCBs, CRAR ≥9%, net NPA <5%, net worth ≥₹25 crore; for NBFC-ND-SIs, net owned funds ≥₹100 crore, net NPA <3% for 3 years, and net profit for 3 years.
- Obtain a No-Objection Certificate from your respective RBI regulatory department before applying for NDS-OM membership.
- Ensure you have a current account with RBI or a funds account with a Designated Settlement Bank, an SGL account, NDS membership, INFINET connectivity, and CCIL membership.
- Submit the application with all required documents to the RBI as per the circular's annex.
Who it affects
Licensed Urban Co-operative Banks (UCBs), Systemically Important Non-Deposit taking NBFCs (NBFC-ND-SIs) under Section 45-I(c)(ii)
What is NDS-OM and why is this extension important?
NDS-OM is RBI's electronic trading platform for government securities. This extension allows UCBs and NBFC-ND-SIs to trade directly, broadening market participation and improving secondary market liquidity.
What are the key financial criteria for UCBs to get direct access?
UCBs need a minimum CRAR of 9%, net NPAs below 5%, and net worth of at least ₹25 crore, along with infrastructure like SGL account, NDS membership, and CCIL membership.
Do NBFC-ND-SIs need a No-Objection Certificate?
Yes, all eligible entities must obtain a No-Objection Certificate from their respective RBI regulatory department before applying for NDS-OM membership.