What changed
Previously, banks had to approach RBI for fixing prudential limits for Call/Notice Money Market transactions. Now, banks/PDs/co-operative banks can determine these limits themselves with Board approval, based on the IDMD Master Circular dated July 1, 2013. The limits must be conveyed to CCIL for NDS-CALL system setup and advised to RBI's Financial Markets Department.
What it means for you
This gives banks greater autonomy in managing their short-term liquidity operations, reducing regulatory burden. It shifts responsibility to banks' boards for prudent limit-setting, potentially speeding up market operations. Lenders must ensure robust internal processes to avoid excessive risk-taking.
What you must do
- Obtain Board approval for prudential limits on borrowing/lending in Call/Notice Money Market as per the July 1, 2013 Master Circular.
- Convey the approved limits to CCIL for configuration in the NDS-CALL system.
- Advise RBI's Financial Markets Department (FMD) of the limits set.
- Ensure compliance with the circular effective from March 3, 2014.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Co-operative Banks, Primary Dealers
What is the key change in this circular?
Banks no longer need RBI's prior approval for prudential limits in Call/Notice Money Market; they can set limits with Board approval.
When does this circular take effect?
It is effective from March 3, 2014.
Who must be informed of the new limits?
The limits must be conveyed to CCIL for NDS-CALL system and advised to RBI's Financial Markets Department.