RBI to enhance borrowing limit of standalone PDS in term money

The Reserve Bank of India (RBI) has increased the aggregate liquidity limit available to Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility, raising it from ₹10,000 crore to ₹15,000 crore, effective April 2, 2025. This adjustment follows an assessment of current and evolving liquidity conditions and aims to provide SPDs with greater access to funds at the prevailing repo rate.

The RBI has also permitted SPDs to participate in all repo operations, regardless of the tenor, a move that expands their liquidity management options. Previously, SPDs were restricted from participating in the Marginal Standing Facility and could engage in long-term Variable Rate Repo (VRR) operations only on a case-by-case basis.

Industry participants have noted that the increased liquidity limit will benefit SPDs by offering more avenues to secure funding, although it is not expected to significantly impact the gilts market. The decision underscores the RBI's ongoing efforts to strengthen the Government Securities (G-Sec) market infrastructure by enhancing the role of PDs in underwriting, market-making, and secondary trading activities.

This development aligns with broader regulatory initiatives to liberalize financial frameworks, including recent changes to External Commercial Borrowing (ECB) norms, which have also expanded borrowing flexibility for Indian corporates.