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RBI Wants NBFCs and Companies in the Money Market: What the Liquidity Push Means
The RBI wants to open the money market to NBFCs and big companies. The money market is where banks and large firms lend and borrow cash for short periods. An NBFC (Non-Banking Financial Company) is a lender that gives loans but is not a full bank. On June 25, 2026, the RBI put out draft rules to let these new players join. The aim is simple: more cash should flow more freely through the system. Here is what changes.
What the RBI proposed
Right now, only banks and standalone primary dealers can take part in the “term money market”. A standalone primary dealer is a firm that mainly trades government bonds. The term money market is where you can borrow for longer than 14 days, up to one year.
Under the new draft, the RBI would let all Indian financial institutions and NBFCs — including housing finance companies — take part as both borrowers and lenders. Regular companies (corporates) would be allowed in too, but only as lenders. None of these new players can enter the “call and notice money market”, which is for very short, overnight-style lending. People can send feedback on the draft until July 17, 2026.
The borrowing limits
The RBI set caps so no one borrows too much. For NBFCs, the limit is 200% of their net owned funds at the end of the previous financial year. Net owned funds is basically a lender’s own core money, like its capital. For standalone primary dealers, the RBI raised the limit to 400% of net owned funds. This covers borrowing through term money and inter-corporate deposits together (inter-corporate deposits are loans between companies).
Each participant must set its own prudent limits, with board approval, and tell the Clearcorp Dealing System about them. Clearcorp runs the NDS-CALL system, the platform the RBI uses for these trades.
Key facts
| Item | Detail |
|---|---|
| Draft rules issued | June 25, 2026 |
| Feedback deadline | July 17, 2026 |
| NBFCs allowed as | Borrowers and lenders |
| Companies allowed as | Lenders only |
| NBFC borrowing limit | 200% of net owned funds |
| Primary dealer limit (raised) | 400% of net owned funds |
| Term money market period | Over 14 days, up to 1 year |
| Off-platform trade reporting | Within 15 minutes |
What it means: the RBI is widening the pool of lenders and borrowers so short-term cash moves more easily. Trades can happen over-the-counter, including on the NDS-CALL platform. Any trade done off the platform must be reported to NDS-CALL within 15 minutes. Participants can set their own interest rates.
Why the RBI is doing this
The RBI said an active term money market gives firms another way to raise funds. It also helps “monetary policy transmission” — meaning the RBI’s rate decisions reach the wider economy faster. It does this by linking very short-term rates to longer-term ones.
The RBI noted the draft aims to “further enhance the depth of participation and liquidity in the term money market segment”. RBI Governor Sanjay Malhotra first announced these ideas in the April policy. So this draft is the detailed follow-up.
How the trades will work
The RBI kept the trading rules flexible but clear. Participants can decide their own interest rates in the money market. Deals can be done over-the-counter, which simply means directly between two parties rather than on a public exchange. They can use the NDS-CALL platform or any other electronic trading platform the central bank approves.
If a trade is done off the NDS-CALL platform, it must be reported to NDS-CALL within 15 minutes. This keeps the regulator’s view of the market complete and up to date. Eligible participants may also set separate internal limits for borrowing and lending, with board approval, and must share those limits with Clearcorp. The idea is to grow the market while keeping risk in check.
FAQ
Can companies borrow in the money market under these rules?
No. Regular companies can only lend. NBFCs and financial institutions can both borrow and lend. None of the new players can enter the call and notice (overnight) money market.
When do these rules take effect?
They are still a draft. Stakeholders can give feedback until July 17, 2026. Final rules will come after the RBI reviews the responses.
Why it matters, especially for India and founders
For NBFCs, this is a fresh funding door. Many NBFCs lend to small businesses and consumers, so cheaper, easier short-term cash can flow down to them. For corporate finance teams, idle cash can now be lent out in the term money market for a return. Market players expect better liquidity and more efficient cash management.
This move sits inside a wider RBI reform wave, alongside its new FCNR(B) deposit rules for NRIs and its directions on credit on UPI. Together they point to an RBI focused on getting more money moving through the system.
Bottom line: if the draft becomes law, India’s short-term cash market gets bigger and deeper. That should help NBFCs and companies manage funds better — and help the RBI’s rate signals reach the economy faster.
Source: Financial Express — RBI proposes to allow NBFCs in money market in liquidity push.