Discount and Finance House of India (DFHI) has surpassed the turnover and success ratios fixed by the Reserve Bank of India (RBI) for primary dealers (PDs).
This gives an indication that the target fixed by the apex bank is achievable, and contradicts the claims made by many PDs to the contrary.
DFHI's success ratio at the auctions up to August 30 1996, has been 51.56 per cent in the case of treasury bills and 87.30 per cent for government dated securities. This, against the prescribed ratios of 40 per cent and 33.33 per cent respectively.
The company's total turnover ratio during the period was 10.42 times for treasury bills and 13.85 per cent for dated securites compared with the stipulated ratios of 10 times and 5 times respectively.
DFHI is the largest primary dealer followed by Securities Trading Corporation of India (STCI). The former operates in the short-term market, while the latter does so in the long-term segment. The funding provided by RBI depends on the turnover and success ratios achieved by the PDs. Conversely, the failure to accomplish these ratios could even lead to a withdrawl of the funding facility. But, with DFHI bettering the targets set by the central bank, the funding support is expected to continue.
The success ratio is the ratio of securities alloted at primary auction vis-a vis the number of bids made. A turnover ratio is the number of times the portfolio of a primary dealer is churned.
According to the DFHI annual report, repo transactions in treasury bills have fallen by a whopping Rs 7,221 crore to Rs 933 crore in the first five months of the present financial year. The turnover in this segment on September 1, 1995 was Rs 8,154 crore.