Economy / Money Market and Capital Market in India - Intruments and Dynamics / Discount and Finance House of India (DFHI)
Discount and Finance House of India (DFHI)
Introduction
- The Discount and Finance House of India (DFHI), founded in March 1988 and operational since April 1988, serves as a money market institution.
- Its principal aim is to ease short-term liquidity imbalances by fostering a robust secondary market for money market instruments.
- DFHI's establishment followed the guidance of the Vaghul Committee.
- In 2004, the Reserve Bank of India (RBI) transferred its entire stake to SBI Giltz Limited, which subsequently renamed it SBI DFHI.
Major Functions on DFHI
- DFHI actively engages in transactions across all money market segments.
- It participates in borrowing and lending in the call, notice, and term money market.
- Additionally, DFHI buys and sells treasury bills from auctions, along with commercial bills, certificates of deposit (CDs), and commercial papers (CPs).
- To foster an active secondary market, DFHI provides daily bid (buying) and offer (selling) rates for these money market instruments.
- Its presence fills gaps by facilitating buying and selling of these bills in the secondary market.
- DFHI's role in the secondary market benefits corporate entities and other organizations by enabling them to invest their short-term surpluses and liquidate them as needed.
