What changed
RBI increased the minimum annual turnover target for PDs dealing with mid-segment and retail investors. For bank PDs, the target is now 100% of minimum prescribed Net Owned Funds (NOF), and for standalone PDs, it is 150% of minimum prescribed NOF. This applies for the period July 2014 to June 2015 and will be reviewed annually.
What it means for you
PDs must step up their business volumes with mid-segment and retail clients to meet the higher turnover thresholds. Bank PDs face a relatively lower target than standalone PDs, reflecting their different capital structures. New PD applicants must also comply with these norms from the start.
What you must do
- Review your current mid-segment and retail turnover against the new NOF-linked targets.
- Adjust business strategies to ensure you meet the 100% (bank PD) or 150% (standalone PD) target by June 2015.
- Incorporate these targets into your annual planning and reporting processes.
- If applying for PD authorization, ensure your business plan aligns with these enhanced turnover requirements.
Who it affects
Bank Primary Dealers (PDs), Standalone Primary Dealers (PDs), New entities applying for PD authorization
What is the new annual turnover target for bank PDs?
Bank PDs must achieve a minimum annual turnover of 100% of their minimum prescribed Net Owned Funds (NOF) for mid-segment and retail investors.
When does this new target apply?
The target is effective for the period from July 2014 to June 2015 and will be reviewed annually thereafter.
Does this apply to new PD applicants?
Yes, new entities applying for PD authorization must also meet these enhanced turnover norms.