Master Direction - Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021 (Updated as on June 08, 2023)
UR
- Applies toCommercial, Payment, Small Finance, Regional Rural, Co-operative Banks and Primary Dealers dealing in call, notice and term money
- StatusIn force
- IssuedApr 01, 2021
- Amendmentsnone tracked
- Length33 points in 2 sections · 3 min read
The four dates on this rule
- PublishedApr 01, 2021The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyApril 05, 2021The day this rule starts to apply, as RBI's own text states it.
- Time to get ready4 daysThe room between the day it was published and the day it starts to apply.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. Who can deal here
Six kinds of bank, plus Primary Dealers, can borrow or lend here.
2. Board sets the lending limit
Each participant's own Board approves its limit for lending here.
3. Bank's own board-approved limit
A Scheduled Commercial Bank sets its own board-approved borrowing limit.
4. Small Finance Bank limit
A Small Finance Bank's Call and Notice Money limit is tied to its capital.
5. Payment Bank and RRB limit
Payment Banks and Regional Rural Banks face the same capital-based limit.
6. Co-operative bank borrowing limit
A co-operative bank can borrow 2 per cent of last year's deposits.
BankPulse example. A co-operative bank with Rs 1,000 crore of deposits last year can borrow Rs 20 crore (2.0 per cent).
7. Primary Dealer borrowing limit
A Primary Dealer's limit is tied to 225 per cent of its own funds.
8. Trading hours 9 to 5
Trading runs from 9 in the morning to 5 in the evening.
9. Deals are not cancelled
A Call, Notice or Term Money deal is normally not cancelled.
10. Early exit needs agreement
A Notice or Term deal can end early if both sides agree the price.
11. Must answer RBI's questions
A participant must give RBI any information it asks for.
12. RBI can bar dealing
RBI can stop someone dealing here for one month at a time.
13. A hearing comes first
RBI must give the person a chance to explain first.
Do it
1. Internal limits reported to RBI
A participant's own internal limits go to the Reserve Bank by email.
2. Cancellations must be reported
Every cancellation or early end of a deal must be reported.
3. Report trades within 15 minutes
A trade off NDS-CALL is reported there within 15 minutes.
4. Join NDS-CALL within six months
A new participant must join NDS-CALL within six months.
5. Cancellations reported within 15 minutes
Ending a deal early is also reported within 15 minutes.
6. Report any misreporting at once
Any wrong or double reporting must reach Clearcorp right away.
Background
1. The rule's own name
This rule is called the 2021 Call, Notice and Term Money Directions.
2. Started 5 April 2021
The rule started on 5 April 2021.
3. What Call Money means
Call Money is unsecured borrowing or lending done overnight.
4. What NDS-CALL is
NDS-CALL is the electronic platform this market trades and reports through.
5. What Notice Money means
Notice Money covers unsecured deals from 2 to 14 days.
6. What OTC markets means
OTC markets cover deals done off a stock exchange, ETPs included.
7. What Term Money means
Term Money covers unsecured lending for more than 14 days, up to one year.
8. Interest rates are free
Participants are free to set their own interest rate.
9. Where trades are executed
Deals happen over the counter, including on NDS-CALL or another approved platform.
10. FIMMDA sets market practices
FIMMDA sets the standard market practice and paperwork for these deals.
11. NDS-CALL trades need no re-reporting
A trade already done on NDS-CALL is not reported again.
12. RBI may publish anonymised data
RBI can publish anonymised figures about this market.
13. RBI can make it public
RBI can also make the ban public.
14. Old deals keep old rules
Deals made under the old rules keep those rules till they end.