New Role of DFHI in Money Market

8/8/2019 New Role of DFHI in Money Market

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Why DFHI is formed ?

The Vaghul Committee had endorsed the

recommendations for banking commission in1972 and Chore committee in 1980 regarding

setting up specialised institutions as a

autonomous financial Intermediary, for

developing the money market and provide

liquidity to the instruments.


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It was incorporated on March, 1988 underThe Companies Act, 1956. According to

Companies Act, DFHI became the subsidiaryof SBI.

DFHI commenced its operations on April,1988.

As on 12 August, 2010, the SBI Bank hasinvested during the quarter further amount ofRs.37.64 crore in SBI DFHI Ltd. increasingtheir shareholding to 62.49%.


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1. The paidup capital of Rs. 200 crores contributedjointly by RBI, Public Sector Banks and all IndiaFinancial Institutions in the proportion of 5:3:2.

2. The authorized capital of the company is Rs 250crores.

3. Refinance facility of different types from the

RBI against the collateral of instruments it dealsin.

4. Line of credit from banks on a consortium basisof Rs. 100 Crore from 28 public sector banks.


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The main objective of increasing the transaction in orturnover of the money market assets.

To facilitate the smoothening of the short term

liquidity imbalance by developing an active moneymarket and integrating the various segment of moneymarket.

Facilitate money market transaction of small andmedium sized institutions that are not regular

participants in the market. To promote secondary market in short term money

market instruments i.e. to be an active trader inmoney market instruments rather than a mererepository, and thereby, impart improved liquidity to

short term money market instruments


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DFHI deals in the following instruments / products:

Treasury Bills Government Securities

Certificates of Deposit

Commercial Papers

Call (overnight) Money, Notice money and TermMoney

Interest rate swaps/Forward rate Agreements.


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To discount, purchase & sale treasury bills, tradebills, bills of exchange, commercial bills andcommercial papers.

To play an important role as a lender, borroweror broker in the Inter-Bank call Money Market.

To promote and support company funds, trustsand other organization for development of shortterm money market.


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To advise government, banks And financialinstitutions in evolving schemes for growth

and development of money market. It mobilizes funds/resources from Commercial

or Cooperative banks, FI and CorporateEntities which are pooled and lend the money

market. Help the corposrate entities, banks and FI to

raise shirt term money and invest short termsurplus.


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It stabilize the call and short term deposit rate

through larger turnover.

It extend repos, buy back facility to 14 days tobanks and FI In money market instruments.

Two regular quotes Bid and offer in money

market instruments provided by DHFI serveas a base to broaden the secondary market

and give an assured liquidity to the

instruments.


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SBI DFHI Invest- G-Sec., State Dev. Loans, T-

Bills.

SBI DFHI Invest Plus Bank CDs, Corp.CPs., Corporate Bonds

SBI DFHI Money - ICD

SBI DFHI Trade High yield G-Sec.


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Individuals

Corporate

Regional rural banks Cooperative Banks

Provident Funds, Pension Funds, Gratuity Funds

Trusts

Insurance Companies

Mutual Funds

Banks

.


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With own reference and support from RBI in

refinance facility and broad based money

instruments, DFHI is poised for continuedsustained growth and more effective role to

fulfill the basic objective of the money market

i.e to facilitate smoothening of short term

liquidity.


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www.sbidfhi.com

www.investopedia.com

www.businessfinance.com www.wikipedia.com

New Role of DFHI in Money Market

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