RBI proposes wider market access: draft norms to deepen money and government-securities markets
The Reserve Bank of India (RBI) on Thursday issued draft directions aimed at deepening India's short-term funding and bond markets. The draft Master Direction - RBI (Call, Notice and Term Money Markets) Directions, 2026 proposes opening the term money market to a wider set of participants — including NBFCs (such as mortgage providers), All India Financial Institutions and corporates — as both borrowers and lenders, with prudential limits set by each participant's own board. Separately, the draft Master Direction on Secondary Market Transactions in Government Securities, 2026 consolidates rules for outright, 'When Issued' and short-sale trades and explicitly widens access to retail investors, demat account holders and those trading through stock exchanges, superseding numerous RBI circulars issued since 2000. Standalone primary dealers would be allowed to borrow up to 400% of their net owned funds via term money and inter-corporate deposits combined.
Key Facts & Details
9 points- 1The RBI issued two draft Master Directions to deepen the money and government-securities (G-Sec) markets.
- 2The Call, Notice and Term Money Markets Directions, 2026 would open the term money market to NBFCs, AIFIs and corporates as borrowers and lenders.
- 3Prudential lending limits would be decided by each participant's board, rather than fixed centrally.
- 4The Secondary Market Transactions in Government Securities Directions, 2026 consolidates outright, 'When Issued' and short-sale rules and widens access to retail and demat investors and stock-exchange participants.
- 5Standalone primary dealers could borrow up to 400% of net owned funds via term money plus inter-corporate deposits.
- 6The G-Sec direction would supersede RBI circulars issued since 2000, creating a unified rulebook.
Deep Dive
- +Broadening the participant base is intended to improve liquidity and price discovery in India's short-term funding markets.
- +Easier retail access to government securities supports the RBI's 'Retail Direct' push to bring small investors into the sovereign bond market.
- +Consolidating two decades of scattered circulars into single Master Directions improves regulatory clarity for market participants.
Exam Focus
Which RBI draft direction proposes opening the term money market to NBFCs and corporates?
Related Topics
Exam Relevance & Angle
Money-market and government-securities reforms are core RBI Grade B and banking-PO topics. The named draft directions, the widened participant base, and the consolidation of post-2000 circulars are precise, officer-level exam hooks.
Target Exams
Background & Context
The money market is the segment for very short-term borrowing and lending — the call money (overnight), notice money (2-14 days) and term money (beyond 14 days) markets. Government securities (G-Secs) are sovereign debt instruments traded in the secondary market via the RBI's Negotiated Dealing System-Order Matching (NDS-OM) platform; 'When Issued' trading allows dealing in a security before it is formally issued, while short-selling lets participants sell securities they do not yet hold. Primary dealers are RBI-registered firms that underwrite and make markets in government bonds. A deeper, more liquid bond market lowers the government's borrowing cost and strengthens monetary-policy transmission.
Related GK Concepts
Must KnowTest Yourself
1 / 2The RBI's draft 'Call, Notice and Term Money Markets Directions, 2026' proposes to allow which entities to participate in the term money market?
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