RBI asks primary dealers to stop short-term debt issues

The Reserve Bank of India (RBI) said standalone primary dealers will not be allowed to raise capital through short-term bonds from July 1, and should instead issue long-tenure debt to strengthen their capital base and align with Basel III norms for banks.

June 27, 2012 / 20:30 IST

The Reserve Bank of India (RBI) said standalone primary dealers will not be allowed to raise capital through short-term bonds from July 1, and should instead issue long-tenure debt to strengthen their capital base and align with Basel III norms for banks.

The RBI had earlier allowed the primary dealers (PDs) to raise short-term capital to meet their market risk since they were more exposed to such risks as underwriters of government bond auction.

"However, PDs which are already having Tier-III capital may continue to recognise it as an eligible capital till the maturity of such subordinated debts," the RBI said on Wednesday.

first published: Jun 27, 2012 07:36 pm

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