RBI Propose Draft to Expand Money Market Access for NBFCs and Firms

The Reserve Bank of India (RBI) has proposed to broaden participation in the country's money market to include non-banking financial companies (NBFCs), shadow lenders, and other financial institutions. This initiative aims to deepen funding markets and expand access to short-term liquidity. 

Draft Proposals for Money Market Participation 

Currently, only banks and standalone primary dealers are allowed to participate in India's term money market under specific prudential limits.  

The RBI's draft proposals, issued on June 25, 2026, suggest that NBFCs, including mortgage providers, be permitted to trade in the term money markets as both borrowers and lenders. However, smaller non-bank finance firms will be excluded from this participation. 

Inclusion of Companies as Lenders 

Under the new draft rules, companies will also be allowed to participate in the term money market as lenders.  

This move is part of the RBI's ongoing efforts to encourage greater participation in the unsecured overnight call money market, a key monetary policy target. Presently, India's money markets are dominated by secured participants such as banks and primary dealers, with daily turnover reaching approximately $70 billion. 

Read More: RBI Introduces Revised Customer Protection Framework for Digital Banking Fraud! 

Prudential Limits for Shadow Lenders 

For shadow lenders, the RBI has proposed prudential limits for participation in these markets at 200% of net-owned funds as of the end of the previous fiscal year. For financial institutions, the limits are proposed to align with those prescribed by the central bank’s department of regulation. 

Timeline for Feedback and Implementation 

The central bank initially outlined this proposal in its April policy statement. Comments on the draft proposals are invited by July 17, 2026, allowing stakeholders ample time to provide feedback and suggestions. 

Conclusion 

The RBI's draft proposals aim to expand money market access to NBFCs and companies, excluding smaller non-bank finance firms. Shadow lenders can participate up to 200% of net-owned funds, with feedback due by July 17, 2026. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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