To push retailing of government bonds, the Reserve Bank of India (RBI) has made it mandatory for existing and prospective primary dealers (PDs) to specify turnover targets for retail business in annual plans.
Besides retail segments, PDs will also would have to give turnover targets to be achieved on behalf of the mid-segment, comprising provident funds, urban co-operative banks, regional rural banks and trusts.
Further, the annual turnover target from mid-segment and retail investors should not be less than 75 per cent of the minimum net owned funds for PDs, which is prescribed from time to time.
RBI on Tuesday issued revised guidelines for authorisation of primary dealers. These norms are expected to ensure new primary dealers are adequately equipped to participate in government bond auctions. The financial institutions and companies intending to set up a primary dealership must have Rs 150 crore minimum net-owned funds (NOFs). They must have an exposure to the securities business for at least one year prior to the submission of application. Those wishing to work as diversified PDs will need to have at least Rs 250 crore minimum NOFs. Banks intending to undertake PD business as their departments will need to have NOFs of Rs 1,000 crore.