RBI hikes inter-corporate deposit limit for primary dealer banks

04 Oct 2010

1

The Reserve Bank of India has liberalised guidelines for primary dealer banks raising resources through inter-corporate deposits.

Standalone PDs can now raise funds through ICDs up to 75 per cent of their net owned funds as at the end of the preceding financial year, RBI said in a notification today.

Further, such PDs can raise ICDs depending on their funding needs. Accordingly, the RBI has now amended its earlier master circular relating to inter-corporate deposits.

However, RBI said, PDs should raise ICDs sparingly and should not use it as a continuous source of funds.

The board of directors of the PD should lay down a policy on raising corporate debt after proper and due consideration of the risks involved, RBI said.

While the ICDs should in no case exceed 75 per cent of the net owned funds of PDs in the preceding financial year, RBI said actual dependence on ICDs should be much below the ceiling.

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