RBI opens term money market to NBFCs, corporates to boost liquidity

Mumbai, Apr 8, 2026

RBI allows NBFCs, corporates and AIFIs to participate in term money market to deepen liquidity, improve price discovery and strengthen policy transmission

The Reserve Bank of India will allow participation of non-bank entities, including all-India financial institutions (AIFIs), non-banking financial companies (NBFCs), housing finance companies, and corporates, in the term money market, the central bank said in the Statement on Developmental and Regulatory Policies on Wednesday.

The term money market is a segment where funds are borrowed and lent for a period of at least 14 days up to one year. These transactions are typically uncollateralised and non-transferable, unlike instruments such as commercial paper (CP) and certificates of deposit (CD).

The RBI said that the step was taken to deepen liquidity and strengthen monetary policy transmission.

The State Bank of India said in its report that since banks are net lenders in the term money market, the move is positive as it broadens demand for funds and enables better deployment of intraday surplus liquidity. It is also expected to have a moderating impact on yields going forward.

“We understand it is an important step that would deepen and broaden the G-Sec market, being yield accretive going forward,” the report said.

Until now, participation in this segment was restricted to banks and standalone primary dealers. The central bank has also decided to enhance borrowing limits for standalone primary dealers to support market activity.

The RBI said that the term money market, which provides funding beyond overnight tenors, plays a key role in linking short-term rates with longer-duration interest rates. The move is expected to widen the participant base, improve price discovery, and strengthen the transmission of policy signals across the yield curve.

[The Business Standard]