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☑️Who are Primary Dealers (PDs) –
👉They are financial institutions authorized by the Reserve Bank of India (RBI) to underwrite and participate in the primary auction of (G-Secs)
👉They also play a key role in developing an active secondary market for G-Secs.
☑️Types of Primary Dealers in India:
👉Standalone Primary Dealers (SPDs)
– institutions only dealing in G-Secs
– Regulated by RBI under the RBI Act, 1934
👉Bank Primary Dealers
– Commercial banks with PD licenses
– Regulated by RBI and subject to Banking Regulation Act,1949
☑️Functions -
1. Underwriting: Mandatory participation in the primary auction of G-Secs
2. Market Making: Provide two-way quotes (buy/sell) in the secondary market
3. Liquidity Support: Help ensure easy buying/selling of G-Secs
4: Participation in RBI Open Market Operations(OMOs)
☑️Privileges of Primary Dealers:-
👉Access to call money market: Overnight funds to manage liquidity
👉Access to RBI Liquidity Support: Through repo/reverse repo operations
👉Membership in NDS-OM: Negotiated Dealing System – Order Matching platform for G-Secs trading
☑️Eligibility:
👉Minimum net owned funds: ₹150 crore (for Standalone Primary Dealers)
👉Expertise in debt markets & Strong risk management systems
☑️Examples:-
SBI DFHI Ltd
ICICI Securities Primary Dealership Ltd
PNB Gilts Ltd
Standard Chartered Bank
HDFC Bank (as a bank PD)
#Upsc #IndianEconomy
BY CSR's IAS - Official UPSC/PSC Preparation Channel
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