The Reserve Bank of India (RBI) has permitted standalone primary dealers (SPDs) to borrow foreign currency from parent companies and authorized entities. These borrowings, accessed through nostro accounts, aim to support operational needs. With seven SPDs registered as non-banking financial companies (NBFCs) as of March 2023, the RBI has expanded their scope to include risk management and inter-bank dealings in forex products. Reporting requirements for foreign currency borrowings have been outlined, emphasizing adherence to prescribed limits. Additionally, SPDs can now quote in forex, with funding available from parent companies to address settlement failures. This move aligns with efforts to facilitate foreign exchange operations for primary dealers, enhancing their role in the financial market.
RBI Allows Standalone Primary Dealers to Borrow in Foreign Currency
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