{"id":34637,"date":"2024-03-19T05:37:21","date_gmt":"2024-03-19T05:37:21","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=34637"},"modified":"2024-03-19T05:37:22","modified_gmt":"2024-03-19T05:37:22","slug":"discount-and-finance-house-of-india-dfhi-upsc-economy-notes","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/","title":{"rendered":"Discount and Finance House of India (DFHI) &#8211; UPSC Economy Notes"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-economy?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Blog+Economy\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png\" alt=\"\" class=\"wp-image-42386\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>The Discount and Finance House of India (DFHI), <strong>founded in March 1988<\/strong> and operational since April 1988, <strong>serves as a money market institution<\/strong>.&nbsp;<\/li><li>Its principal aim is to <strong>ease short-term liquidity imbalances by fostering a robust secondary market for money market instruments.<\/strong>&nbsp;<\/li><li>DFHI&#8217;s establishment followed the guidance of the <strong>Vaghul Committee<\/strong>.&nbsp;<\/li><li>In 2004, the Reserve Bank of India (RBI) <strong>transferred its entire stake to SBI Giltz Limited, which subsequently renamed it SBI DFHI.<\/strong><\/li><\/ul>\n\n\n\n<p><strong>Major Functions on DFHI<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>DFHI actively <strong>engages in transactions across all money market segments<\/strong>.\u00a0<\/li><li>It participates in <strong>borrowing and lending in the call, notice, and term money market.<\/strong>\u00a0<\/li><li>Additionally, <strong>DFHI buys and sells treasury bills from auctions, along with commercial bills, certificates of deposit (CDs), and commercial papers (CPs).<\/strong><\/li><li>To foster an active secondary market, DFHI <strong>provides daily bid (buying) and offer (selling) rates for these money market instruments<\/strong>.\u00a0<\/li><li>Its presence fills gaps by facilitating <strong>buying and selling of these bills in the secondary market.<\/strong><\/li><li>DFHI&#8217;s role in the secondary market <strong>benefits corporate entities and other organizations by enabling them to invest their short-term surpluses and liquidate them as needed.<\/strong><\/li><\/ul>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-69d51fb52e298\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d51fb52e298\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#FAQs\" title=\"FAQs\">FAQs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#Q_What_is_Discount_and_Finance_House_of_India_DFHI\" title=\"Q: What is Discount and Finance House of India (DFHI)?\">Q: What is Discount and Finance House of India (DFHI)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#Q_What_are_the_primary_functions_of_DFHI\" title=\"Q: What are the primary functions of DFHI?\">Q: What are the primary functions of DFHI?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#Q_How_does_DFHI_contribute_to_the_development_of_the_Indian_financial_system\" title=\"Q: How does DFHI contribute to the development of the Indian financial system?\">Q: How does DFHI contribute to the development of the Indian financial system?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#Q_What_is_the_regulatory_framework_governing_DFHI_operations\" title=\"Q: What is the regulatory framework governing DFHI operations?\">Q: What is the regulatory framework governing DFHI operations?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#Q_How_does_DFHI_impact_monetary_policy_transmission_in_India\" title=\"Q: How does DFHI impact monetary policy transmission in India?\">Q: How does DFHI impact monetary policy transmission in India?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/edukemy.com\/blog\/discount-and-finance-house-of-india-dfhi-upsc-economy-notes\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_is_Discount_and_Finance_House_of_India_DFHI\"><\/span>Q: <strong>What is Discount and Finance House of India (DFHI)?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: DFHI is a specialized financial institution established in 1988 by the Reserve Bank of India (RBI) to provide liquidity and support to the Indian financial markets. It operates as a money market institution, facilitating short-term lending and borrowing operations among banks, financial institutions, and the government.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_are_the_primary_functions_of_DFHI\"><\/span>Q: <strong>What are the primary functions of DFHI?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: DFHI primarily engages in the discounting and rediscounting of high-quality bills of exchange, promissory notes, and other eligible instruments. It acts as a secondary market for such instruments, providing liquidity to financial institutions and banks. Additionally, DFHI plays a crucial role in managing the cash reserves of banks and maintaining stability in the money market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_How_does_DFHI_contribute_to_the_development_of_the_Indian_financial_system\"><\/span>Q: <strong>How does DFHI contribute to the development of the Indian financial system?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: DFHI plays a pivotal role in enhancing the efficiency and liquidity of the money market by providing a platform for banks and financial institutions to manage their short-term funding requirements. By facilitating the trading of money market instruments and offering various financial services, DFHI fosters the growth and stability of the Indian financial system.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_What_is_the_regulatory_framework_governing_DFHI_operations\"><\/span>Q: <strong>What is the regulatory framework governing DFHI operations?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: DFHI operates under the regulatory oversight of the Reserve Bank of India (RBI), which sets the guidelines and regulations for its functioning. These regulations encompass various aspects such as capital adequacy, risk management, and operational standards to ensure the stability and integrity of DFHI&#8217;s operations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_How_does_DFHI_impact_monetary_policy_transmission_in_India\"><\/span>Q: <strong>How does DFHI impact monetary policy transmission in India?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A: DFHI plays a crucial role in the transmission of monetary policy decisions by the Reserve Bank of India (RBI) to the broader financial system. Through its operations in the money market, DFHI influences short-term interest rates and liquidity conditions, thereby facilitating the implementation of monetary policy objectives such as controlling inflation and supporting economic growth.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p>For Daily Updates and Study Material:<\/p>\n\n\n\n<p>Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>1. 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Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@EduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>The Discount and Finance House of India (DFHI), founded in March 1988 and operational since April 1988, serves as a money market institution.\u00a0<\/p>\n","protected":false},"author":17,"featured_media":34639,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[209],"tags":[2690,235,232,213,140],"class_list":["post-34637","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-notes","tag-dfhi","tag-economy-notes","tag-upsc","tag-upsc-notes","tag-upsc_preparation_strategy"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/34637","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=34637"}],"version-history":[{"count":1,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/34637\/revisions"}],"predecessor-version":[{"id":34640,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/34637\/revisions\/34640"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/34639"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=34637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=34637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=34637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}