- A primary dealer (PD) is an RBI-registered entity authorized in buying and selling government securities (G-Secs). There are two types of primary dealers in India. Standalone primary dealers and bank primary dealers.
- The standalone primary dealers are either subsidiaries of scheduled commercial banks Indian subsidiaries of entities incorporated abroad or companies incorporated under Companies Act 1956 and are registered as Non-Banking Financial Companies (NBFC).
- To expand sources of funding for standalone primary dealers (SPDs), the Reserve Bank of India (RBI) allowed them to borrow in foreign currency from their parent or correspondent outside India or any other central bank-permitted entity and avail overdraft in nostro accounts (not adjusted within five days), only for operational reasons.
- This comes in the backdrop of JP Morgan announcing India’s inclusion in Global Emerging Market Bond Index.
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