Role of DFHI in

Money Market

Presented By:
Manish Gupta, Shruti
Kapoor, Rakesh, Sachin,
Rahul.
 DFHI ( Discount And Finance House of India)

• Why DFHI is formed ?

The Vaghul Committee had endorsed the
recommendations for banking commission in 1972 and
Chore committee in 1980 regarding setting up specialised
institutions as a autonomous financial Intermediary, for
developing the money market and provide liquidity to the
instruments.
 DFHI ( Discount And Finance House of India)

• It was incorporated on March, 1988 under “The

Companies Act, 1956”. According to Companies Act, DFHI
became the subsidiary of SBI.
• DFHI commenced its operations on April, 1988.
• As on 12 August, 2010, the SBI Bank has invested during
the quarter further amount of Rs.37.64 crore in SBI DFHI
Ltd. increasing their shareholding to 62.49%.
 Resources of DFHI Ltd.
1. The paidup capital of Rs. 200 crores contributed jointly
by RBI, Public Sector Banks and all India Financial
Institutions in the proportion of 5:3:2.
2. The authorized capital of the company is Rs 250 crores.
3. Refinance facility of different types from the RBI against
the collateral of instruments it deals in.
4. Line of credit from banks on a consortium basis of Rs. 100
Crore from 28 public sector banks.
 Objectives of DFHI in Money Market

• The main objective of increasing the transaction in or

turnover of the money market assets.
• To facilitate the smoothening of the short term liquidity
imbalance by developing an active money market and
integrating the various segment of money market.
• Facilitate money market transaction of small and medium
sized institutions that are not regular participants in the
market.
• To promote secondary market in short term money market
instruments i.e. to be an active trader in money market
instruments rather than a mere repository, and thereby,
impart improved liquidity to short term money market
instruments.
 Money Market Instruments in which
DFHI Deals
DFHI deals in the following instruments / products:

• Treasury Bills
• Government Securities
• Certificates of Deposit
• Commercial Papers
• Call (overnight) Money, Notice money and Term Money
• Interest rate swaps/Forward rate Agreements.
 Roles of DFHI in Money Market
• To discount, purchase & sale treasury bills, trade bills, bills
of exchange, commercial bills and commercial papers.

• To play an important role as a lender, borrower or broker

in the Inter-Bank call Money Market.

• To promote and support company funds, trusts and other

organization for development of short term money market.
 Roles of DFHI Cont…
• To advise government, banks And financial institutions in
evolving schemes for growth and development of money
market.
• It mobilizes funds/resources from Commercial or
Cooperative banks, FI and Corporate Entities which are
pooled and lend the money market.
• Help the corporate entities, banks and FI to raise shirt
term money and invest short term surplus.
 Roles of DFHI Cont.
• It stabilize the call and short term deposit rate through
larger turnover.
• It extend repos, buy back facility to 14 days to banks and
FI In money market instruments.
• Two regular quotes – Bid and offer in money market
instruments provided by DHFI serve as a base to broaden
the secondary market and give an assured liquidity to the
instruments.
 SBI DFHI Ltd. Offers:
• SBI DFHI Invest - G-Sec., State Dev. Loans, T-
Bills.
• SBI DFHI Invest Plus – Bank CDs, Corp. CPs.,
Corporate Bonds
• SBI DFHI Money - ICD
• SBI DFHI Trade – High yield G-Sec.
 Who Can Deal With SBI DFHI Ltd.

• Individuals
• Corporate
• Regional rural banks
• Cooperative Banks
• Provident Funds, Pension Funds, Gratuity Funds
• Trusts
• Insurance Companies
• Mutual Funds
• Banks
 Conclusion
• With own reference and support from RBI in
refinance facility and broad based money
instruments, DFHI is poised for continued
sustained growth and more effective role to fulfill
the basic objective of the money market i.e to
facilitate smoothening of short term liquidity.
 Bibliography
• www.sbidfhi.com
• www.icai.org
• www.investopedia.com
• www.businessfinance.com
• www.wikipedia.com