RBI Enhances Liquidity Support for Primary Dealers

The Reserve Bank of India (RBI) has announced an increase in the aggregate limit available to Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility. Effective April 2, 2025, the limit has been raised from ₹10,000 crore to ₹15,000 crore, reflecting the central bank’s proactive approach to addressing evolving liquidity conditions in the financial markets.  

Key Highlights:  
- The enhanced liquidity facility aims to strengthen the infrastructure of the Government Securities (G-Sec) market, making it more vibrant, liquid, and broad-based.  
- SPDs will now have greater access to funds, enabling them to improve secondary market trading systems and contribute to price discovery and turnover.  
- The RBI’s decision aligns with its broader strategy to ensure the voluntary holding of G-Secs among a wider investor base and support open market operations (OMO).  
- Individual limits for SPDs will be conveyed separately, while all other terms and conditions of the facility remain unchanged.  
- The move is expected to bolster the role of SPDs as effective conduits for liquidity management and market-making capabilities.  

This development underscores the RBI’s commitment to fostering a resilient and efficient financial ecosystem, ensuring stability and growth in the G-Sec market.  

Sources: Business Standard, The Hindu Business Line, RBI Circulars