RBI raises exposure norms for standalone primary dealers

To facilitate greater participation in corporate bonds by standalone primary dealers, Reserve Bank today doubled the exposure ceiling limits for single borrower to 50 per cent of the latest audited Net Owned Funds (NOF).
While for group borrowers, the exposure ceiling has been raised to 65 per cent from 40 per cent.
"To facilitate greater level of participation in corporate bonds by SPDs, it has been decided to increase exposure ceiling limits in respect of single borrower/counterparty from 25 per cent to 50 per cent of latest audited Net Owned Funds (NOF).
"And in respect of group borrower from 40 per cent to 65 per cent of latest audited NOF only for investments in AAA rated corporate bonds," RBI said in a notification.

In March 2014, RBI revised the exposure norms for standalone primary dealers and had said their clearing exposure to a Qualifying CCP (QCCP) will be kept outside of the exposure ceiling of 25 per cent of its net owned funds applicable to a single borrower or counterparty.
The new guidelines, which came to effect from April 1, 2014, were aimed at promoting central clearing of standardised OTC derivative products through a Central Counter Party (CCP).
"The exposure ceiling limits would be 25 per cent of latest audited Net Owned Funds (NOF) in case of a single borrower or counterparty and 40 per cent of NOF in case of a group borrower," RBI had said.