RBI Raises Liquidity Limit for Standalone Primary Dealers to ₹15,000 Crore

Current Context: On March 28, 2025, the Reserve Bank of India (RBI) announced an increase in the aggregate limit for Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility (SLF).

The limit will rise from ₹10,000 crore to ₹15,000 crore, effective April 2, 2025.

Key Details:

Purpose: The SLF provides SPDs with short-term liquidity at the repo rate, enabling them to support the government securities (G-Sec) market.
Reason for Increase: The decision is based on an assessment of evolving liquidity conditions to ensure adequate funding for SPDs.

Impact:

Enhances SPDs' ability to underwrite and trade G-Secs, improving market liquidity and price discovery.
Strengthens the infrastructure of the G-Sec market, encouraging broader investor participation.
Terms: The RBI will communicate individual limits to SPDs separately. All other terms and conditions of the SLF remain unchanged.

Question:

Q.1 What is the revised aggregate limit for Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility (SLF) as per the RBI’s announcement on March 28, 2025?
a) ₹5,000 crore
b) ₹10,000 crore
c) ₹12,500 crore
d) ₹15,000 crore

Answer: d) The Reserve Bank of India (RBI) has increased the aggregate limit for SPDs under the SLF from ₹10,000 crore to ₹15,000 crore, effective April 2, 2025, to enhance liquidity support for the G-Sec market.