What changed
RBI has released a draft Master Direction for call, notice, and term money markets. The draft proposes to enhance borrowing limits for standalone primary dealers and expand the participant base to enhance depth of participation and liquidity in the term money segment.
What it means for you
Banks and market participants will see broader access and higher borrowing caps in term money markets, potentially improving liquidity. The draft aims to strengthen the link between overnight and longer-term rates, offering alternative funding avenues.
What you must do
- Review the draft Master Direction and assess impact on your treasury operations.
- Submit feedback to RBI by July 17, 2026, via email or post.
- Evaluate potential changes to borrowing limits and participant eligibility for your institution.
- Prepare for implementation once final directions are issued.
Who it affects
Banks, Standalone Primary Dealers, Market participants in money markets
What is the key objective of this draft Master Direction?
To enhance depth of participation and liquidity in the term money market by expanding participant base and increasing borrowing limits for standalone primary dealers, thereby enhancing monetary policy transmission.