e system of Primary Dealers (PDs) in t
e Government Securities Market wasintroduced by Reserve Bank of India in 1995 to strengt
e market infrastructure of Government Securities
DFHI was set up by
BI in March 1988 to activate the Money Market.
It got the status of Primary Dealer in February 1996. Over a period of time,
BI divested itsstake and DFHI became a subsidiary of State Bank of India (SBI).
SBI had also set up a subsidiary in 1996 for doing PD business namely SBI Gilts Limited.
Both these companies were merged in 2004 to become the largest Primary Dealer in the country
Primary Dealers can also be referred to as Merchant Bankers to Government of India as only they are allowed to underwrite primary issues of government securities other than
PDs are allowed t
e following activities as core activities:
1. Dealing and underwriting in Government securities.2. Dealing in Interest
ate Derivatives.3. Providing broking services in Government securities.4. Dealing and underwriting in Corporate / PSU / FI bonds/ debentures.5. Lending in Call/ Notice/ Term/
epo/ CBLO market.6. Investment in Commercial Papers.7. Investment in Certificates of Deposit.8. Investment in debt mutual funds where entire corpus is invested in debt securities.