Source: BL
Context:
In January 2026, Bank of Baroda (BoB) received in-principle approval from the Reserve Bank of India (RBI) to switch from its existing Bank Primary Dealer (PD) business to a wholly-owned subsidiary for undertaking Standalone Primary Dealer (SPD) business.
This marks a key step in the strategic restructuring of Public Sector Banks (PSBs).
What Does the Approval Mean?
- BoB will hive off its PD activities from the bank’s balance sheet
- The new entity will operate as a Standalone Primary Dealer (SPD)
- Final setup is subject to other regulatory approvals
Regulatory Background and Policy Context
- The RBI introduced the Primary Dealer (PD) system in 1995 to deepen the Government Securities (G-Sec) market
- In 2006–07, banks were allowed to undertake PD business departmentally
- RBI has now encouraged clearer separation of risks by strengthening the SPD framework
RBI Liquidity Support to SPD
- RBI increased the aggregate Standing Liquidity Facility (SLF) limit for SPDs
- From Rs 10,000 crore to Rs 15,000 crore
- Effective from April 2, 2025
- Liquidity available at the prevailing repo rate
About Primary Dealers (PDs)
Primary Dealers are RBI-registered NBFCs that act as intermediaries in the Government Securities market, ensuring liquidity and smooth debt issuance.
Functions
- Buy government securities directly from RBI
- Underwrite and distribute G-Secs
- Provide liquidity through secondary market trading
Types of PDs in India
Bank PDs
- PD business conducted as a department within a commercial bank
Standalone Primary Dealers (SPDs)
- Either:
- Wholly-owned subsidiaries of banks, or
- NBFCs incorporated under the Companies Act
About Bank of Baroda
- MD & CEO: Dr. Debadatta Chand
- Headquarters: Vadodara, Gujarat
- Tagline: India’s International Bank
- Established: 1908
