What changed
RBI issued a master circular that consolidates and updates all existing instructions on call/notice money market operations. No new policy changes were introduced; the circular merely brings together previous guidelines for easier reference.
What it means for you
Banks and primary dealers now have a single reference document for call/notice money market rules, reducing compliance confusion. The prudential limits remain unchanged: scheduled commercial banks face borrowing caps of 100% of capital funds (fortnightly average) and lending caps of 25% (fortnightly average), with daily flexibilities (125% borrowing, 50% lending). Co-operative banks' borrowing is capped at 2% of deposits, while PDs can borrow up to 225% of net owned funds on a fortnightly average basis.
What you must do
- Review the master circular to ensure your institution's call/notice money market operations comply with the consolidated prudential limits.
- Update internal policies and training materials to reference this master circular as the single source of guidelines.
- Ensure dealing sessions are conducted within the specified timings (5:00 pm weekdays, 2:30 pm Saturdays) or as specified by RBI from time to time.
- Verify that interest rate calculations follow FIMMDA's Handbook of Market Practices.
Who it affects
Scheduled commercial banks (excluding RRBs), Co-operative banks (excluding Land Development Banks), Primary Dealers
What are the borrowing limits for scheduled commercial banks in the call/notice money market?
On a fortnightly average basis, borrowing must not exceed 100% of capital funds (Tier I + Tier II). However, banks can borrow up to 125% on any single day during a fortnight.
Are non-bank institutions allowed to participate in the call/notice money market?
No, non-bank institutions other than Primary Dealers are not permitted to participate in the call/notice money market.
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.