The Reserve Bank of India (RBI) has issued a draft Master Direction for the Call, Notice, and Term Money Markets, aiming to deepen market participation and enhance liquidity. The directions consolidate previous circulars and introduce explicit borrowing limits, mandate NDS-CALL platform membership, and stipulate strict early termination clauses. Market participants must align their treasury operations, IT reporting systems, and board policies to comply with these new directives.
2. Applicable Entities & Participation Rights
Full Participation
Segments: Call, Notice & Term Money (Borrow & Lend)
- Scheduled Commercial Banks
- Small Finance Banks (SFBs)
- Regional Rural Banks (RRBs)
- Co-operative Banks
- Standalone Primary Dealers (SPDs)
Restricted (Payments Banks)
Segments:
- Borrow & Lend: Call & Notice Money
- Borrow Only: Term Money
Term Money Specialists
Segments: Term Money Only
- Borrow & Lend: AIFIs, NBFCs, HFCs (Excluding NBFC-BL)
- Lend Only: Corporates / Companies
3. Specific Changes & Management Action Plans (MAP)
Amendment 1: Mandated Prudential Limits & Internal Board Limits
High PriorityChange Required: The RBI has explicitly defined maximum borrowing limits based on Capital Funds or Net Owned Funds (NOF) across entities (e.g., NBFCs limited to 200% NOF for Term Money; SPDs up to 400% NOF combining Term Money & ICDs). Furthermore, entities must set their own Board-approved internal limits within these RBI thresholds and communicate them to the NDS-CALL system operator (Clearcorp).
Management Action Plan (MAP)
- ALCO / Treasury Review: Recalculate maximum permissible borrowing limits based on the latest audited balance sheet (Capital Funds/NOF).
- Board Approval: Draft and present a proposal to the Board to establish internal sub-limits for borrowing and lending in these markets.
- System Configuration: Update Treasury Management Systems (TMS) to trigger hard-stops before internal limits are breached.
- Clearcorp Intimation: Establish a protocol to officially communicate the approved internal limits to Clearcorp Dealing System Ltd immediately post-Board approval.
Real World Example: “Alpha Finance”, a registered NBFC (Middle Layer) with a Net Owned Fund of ₹500 Crores, historically borrowed ₹1,200 Crores in the term money market during tight liquidity phases. Under the new draft, their statutory limit is capped at ₹1,000 Crores (200% of NOF). Alpha’s ALCO must immediately revise its borrowing strategy, replacing the ₹200 Crore gap with commercial papers or bank term loans, and get the Board to approve an internal safety limit of ₹900 Crores to prevent regulatory breaches.
Amendment 2: Mandatory NDS-CALL Membership & 15-Minute Reporting
Operational ImpactChange Required: All eligible participants must obtain membership to the NDS-CALL platform within 6 months. OTC transactions (outside NDS-CALL) must be reported to the platform within 15 minutes of execution (when the interest rate is agreed upon). Cancellations/Terminations also require 15-minute reporting.
Management Action Plan (MAP)
- Onboarding: Non-member entities (e.g., certain Co-operative Banks or HFCs) must immediately initiate the application process for NDS-CALL membership to meet the 6-month deadline.
- Process Re-engineering: Revise the front-office to back-office handoff process. The treasury desk must log the trade timestamp exactly when the rate is agreed.
- Automation: Implement API/STP (Straight Through Processing) integration between internal trading platforms (or voice-broker logs) and the NDS-CALL reporting module to bypass manual data entry delays.
- Exception Handling: Set up an internal SLA monitoring dashboard to flag trades approaching the 10-minute mark without being reported.
Real World Example: A treasury dealer at “Apex Urban Co-operative Bank” finalizes an overnight call money borrowing of ₹50 Crores over a recorded telephone line at 10:05 AM. Previously, the back office batched reports at noon. Under the new rule, the back office must input this trade into NDS-CALL by 10:20 AM. Apex Bank decides to implement a digital trade-ticket system where the dealer’s confirmation instantly pings the back-office compliance queue, ensuring reporting by 10:12 AM.
Amendment 3: Lock-in Period for Term Money Terminations
Liquidity ImpactChange Required: While Call and Notice money transactions cannot normally be cancelled, Term Money transactions (which are 15 days to 1 year) can be terminated before maturity. However, the draft mandates that a Term Money transaction can only be terminated after 14 days from the date of the transaction.
Management Action Plan (MAP)
- Liquidity Buffer Management: Update the Liquidity Coverage Ratio (LCR) and internal cash flow models to reflect that Term Money lent out cannot be recalled for at least 14 days.
- Policy Update: Update the Treasury/Investment policy to explicitly state the 14-day lock-in rule for early terminations.
- Counterparty Agreements: Review and revise bilateral Master Agreements with counterparties to reflect the 14-day mandatory lock-in period for any unwinding clauses.
- Training: Sensitize treasury dealers to avoid utilizing Term Money for highly volatile, short-term liquidity parking (under 14 days) if there’s a risk of sudden fund requirement.
Real World Example: On June 1st, “Zenith Housing Finance” lends ₹100 Crores as Term Money for 30 days to another institution. On June 10th (Day 9), Zenith faces an unexpected liquidity crunch due to early loan disbursements and requests to terminate the trade at a mutually agreed price. Due to the new rule, the counterparty must refuse. Zenith must wait until June 15th (Day 15) to execute the termination. To manage this risk proactively, Zenith’s treasury must now maintain a separate highly liquid asset buffer outside of term money lending.
Immediate Next Steps for Compliance Officers
The RBI has invited comments on these draft directions by July 17, 2026. Entities should immediately conduct a gap analysis against current practices.