RBI Master Direction on Call, Notice & Term Money Markets 2021

RBI/2021-22/78 FMRD.DIRD.01/14.01.001/2021-22 April 01, 2021 ( Updated as on June 08, 2023 ) ( Updated as on June 25, 2021 ) To, All Eligible Market Participants Madam/Sir, Master Direction - Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021 Please refer to Paragraph 6 of the Statement on Developmental and Regulatory Policies, Reserve Bank of India , issued as part of the second Bi-monthly Monetary Policy Statement for 2019-20 dated June 06, 2019 regarding Comprehensive Review of Money Market Directions. 2. The draft Directions were released for public comments on December 04, 2020. Based on the feedback received from the market participants, the Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021 were reviewed and have since been finalised. The Directions are enclosed herewith. Yours faithfully, (Dimple Bhandia) Chief General Manager FINANCIAL MARKETS REGULATION DEPARTMENT Notification No. FMRD.DIRD.02 /14.01.001/2021-22 dated April 01, 2021 Master Direction- Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021 In exercise of the powers conferred under section 45W of the Reserve Bank of India Act, 1934 (hereinafter called the Act) read with section 45U of the Act and of all the powers enabling it in this behalf and in supersession of Section I of the FMRD Master Direction No. 2/2016-17 dated July 07, 2016 , Direction No. FMRD.DIRD.09/14.01.001/2018-19 dated October 29, 2018 and Direction No. FMRD.DIRD.01/14.01.001/2020-21 dated December 04, 2020 , the Reserve Bank of India (hereinafter called the Reserve Bank), hereby issues the following Directions to all persons and agencies eligible to deal in Call, Notice and Term Money Markets. 1. Short title and commencement (a) These Directions shall be called the Master Direction- Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021. (b) These Directions shall come into force with effect from April 05, 2021. 2. Definitions (a) For the purpose of these Directions, unless the context otherwise requires: (i) “Bank” means a banking company (including a Payment Bank and a Small Finance Bank) as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 or a “regional rural bank”, a “corresponding new bank” or “State Bank of India” as defined in clauses (ja), (da) and (nc), of section 5 respectively thereof, or a “cooperative bank” as defined in clause (cci) of section 5 read with section 56 of the said Act; (ii) “Call Money” means borrowing or lending in unsecured funds on overnight basis; (iii) “Capital Funds” shall have the meaning assigned in the applicable capital regulations issued by the Department of Regulation of the Reserve Bank as amended from time to time and shall be calculated as per the latest audited balance sheet; (iv) “Electronic Trading Platform” or “ETP” shall have the meaning assigned in paragraph 2 (1) (iii) of the Electronic Trading Platform (Reserve Bank) Directions, 2018 dated October 05, 2018 , as modified from time to time; (v) “Exchange” shall mean ‘recognised stock exchange’ and shall have the same meaning as assigned to in Section 2 (f) of the Securities Contract Regulation Act, 1956. (vi) “Fortnight” shall have the meaning assigned to it under section 42 of the Reserve Bank of India Act, 1934; (vii) “Negotiated Dealing System-CALL” or “NDS-CALL” is the electronic trading platform for execution and reporting of transactions in Call, Notice and Term Money Markets; (viii) “Net Owned Fund” shall have the meaning assigned to it under the Explanation to section 45-IA of the Reserve Bank of India Act, 1934; (ix) “Notice Money” means borrowing or lending in unsecured funds for tenors up to and inclusive of 14 days excluding overnight borrowing or lending; (x) “Over-the-Counter markets” or “OTC markets” refers to markets where transactions are undertaken in any manner other than on exchanges and shall include those executed on electronic trading platforms; (xi) “Payment Bank” means a bank licensed under section 22 of the Banking Regulation Act, 1949 and governed by the terms of the “Reserve Bank Guidelines for Licensing of Payments Banks” dated November 27, 2014 , as amended from time to time; (xii) “Primary Dealer” means a Non-Banking Financial Company that holds a letter of authorisation issued by the Reserve Bank to act as a Primary Dealer, in terms of the "Guidelines for Primary Dealer in Government Securities Market" dated March 29, 1995, as amended from time to time; (xiii) “Small Finance Bank” means a bank licensed under section 22 of the Banking Regulation Act, 1949 and governed by the terms of the “Reserve Bank Guidelines for Licensing of Small Finance Banks” dated November 27, 2014 , as amended from time to time; (xiv) “Term Money” means borrowing or lending in unsecured funds for periods exceeding 14 days and up to one year. (b) Words and expressions used but not defined in these Directions shall have the meaning assigned to them in the Reserve Bank of India Act, 1934. 3. Participants The following entities shall be eligible to participate in the Call, Notice and Term Money Markets, both as borrowers and lenders: (a) Scheduled Commercial Banks (excluding Local Area Banks); (b) Payment Banks; (c) Small Finance Banks; (d) Regional Rural Banks; (e) State Co-operative Banks, District Central Co-operative Banks and Urban Co-operative Banks (hereinafter Co-operative Banks); and (f) Primary Dealers. 4. Prudential limits (a) Prudential limits in respect of outstanding lending transactions in the Call, Notice and Term Money Markets shall be decided by the participants with the approval of their Board within the regulatory framework of the exposure norms prescribed by the Department of Regulation of the Reserve Bank for the eligible participant concerned. (b) Prudential limits for outstanding borrowing transactions in the Call, Notice and Term Money Markets are set out in Table 1 . Table 1: Prudential limits for outstanding borrowing transactions in Call, Notice and Term Money Markets

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/78 · issued 01 Apr 2021. The plain-English explanation above is BankPulse’s own independent summary.

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