In January 2026, Bank of Baroda (BoB), one of India’s prominent Public Sector Banks (PSBs), received in-principle approval from the Reserve Bank of India (RBI) to transition its existing authorization as a Bank Primary Dealer (PD) into a wholly-owned subsidiary dedicated to Standalone Primary Dealer (SPD) activities. This pivotal approval represents a significant move in the strategic restructuring initiatives of the PSB sector.
The RBI has clarified that the establishment of the SPD business is contingent upon obtaining further regulatory approvals. Additionally, the RBI has increased the aggregate limit available to SPDs under the Standing Liquidity Facility at the current repo rate, raising it from Rs 10,000 crore to Rs 15,000 crore, effective April 2, 2025.
Primary Dealers (PDs) were introduced by the RBI in 1995 to enhance the infrastructure of the Government Securities (G-Sec) market. The RBI permitted banks to conduct PD business departmentally starting in 2006-07. PDs are registered Non-Banking Financial Companies (NBFCs) that serve as intermediaries between the RBI and various market participants. They are authorized to buy and sell G-Secs, including bonds and Treasury bills (T-bills), directly from the government's debt manager, such as the RBI, and resell them to maintain liquidity in the G-Sec market.
In India, PDs are classified into two main categories:
As of now, India boasts a total of 7 SPDs, which include:
Additionally, there are 14 bank-affiliated PDs in India, including Canara Bank, Union Bank of India (UBI), and HDFC Bank Limited, among others.
Q1. What is the significance of Bank of Baroda's approval from the RBI?
Answer: The approval allows Bank of Baroda to transition to a Standalone Primary Dealer, enhancing its role in government securities and liquidity management.
Q2. How many Standalone Primary Dealers are currently in India?
Answer: As of now, there are 7 Standalone Primary Dealers (SPDs) registered in India, including notable entities like ICICI Securities and Goldman Sachs.
Q3. What are the two categories of Primary Dealers in India?
Answer: Primary Dealers in India are classified into Bank PDs, which are departments within commercial banks, and Standalone Primary Dealers (SPDs), which operate independently.
Q4. What changes did the RBI implement regarding the Standing Liquidity Facility?
Answer: The RBI increased the aggregate limit for Standalone Primary Dealers under the Standing Liquidity Facility from Rs 10,000 crore to Rs 15,000 crore, effective April 2025.
Q5. When was the system of Primary Dealers introduced in India?
Answer: The system of Primary Dealers was introduced by the RBI in 1995 to strengthen the Government Securities market.
Question 1: What is the role of a Standalone Primary Dealer in India?
A) To operate solely as a commercial bank
B) To act as an intermediary in the government securities market
C) To manage retail banking services
D) To oversee monetary policy implementation
Correct Answer: B
Question 2: Which bank recently received approval to transition to a Standalone Primary Dealer?
A) State Bank of India
B) Bank of Baroda
C) HDFC Bank
D) Canara Bank
Correct Answer: B
Question 3: How many Standalone Primary Dealers are registered in India as of now?
A) 5
B) 6
C) 7
D) 8
Correct Answer: C
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