What changed
Previously, Primary Dealers had to execute an undertaking and obtain authorisation renewal every year. Now, the undertaking must be executed once every three years, with authorisation renewed for the same period. The first triennial undertaking covers July 2013 to June 2016.
What it means for you
This reduces the annual compliance burden for PDs by tripling the validity of their standing arrangement with RBI. However, RBI retains the right to suspend or terminate authorisation at any time under the existing operational guidelines. PDs must ensure their board resolution remains current for the full three-year term.
What you must do
- Submit the first triennial undertaking in the revised format for the period July 2013 to June 2016.
- Ensure a fresh board resolution is passed to support the three-year undertaking.
- Continue to comply with all conditions in the Master Circular on Operational Guidelines to Primary Dealers dated July 2, 2012.
- Note that RBI may still suspend or terminate authorisation if circumstances under para 17.1 of the Master Circular arise.
Who it affects
All standalone Primary Dealers, All Bank-Primary Dealers
What is the new validity period for the PD undertaking?
The undertaking is now valid for three years instead of one year. The first such period is from July 2013 to June 2016.
Do we still need a board resolution every year?
No. A fresh board resolution is required only once every three years, coinciding with the new undertaking cycle.
Can RBI still revoke our authorisation during the three-year period?
Yes. RBI reserves the right to suspend or terminate authorisation at any time under the conditions specified in para 17.1 of the Master Circular dated July 2, 2012.