DFHI

The Discount and Finance House of India Limited13 (DFHI) was set up in April 1988 by the RBI jointly with the public sector banks and financial investment institutions (i.e., LIC, GIC and UTI). Its establishment was an outcome of the long-drawn need of the following two types:

(i) to bring an equilibirium of liquidity in the Indian banking system and

(ii) to impart liquidity to the instruments of the money market prevalent in the economy.

In 2004, the RBI transferred its total holding in the DFHI to the State Bank of India arm SBI Gilts Limited. Its new name is SBI DFHI. It functions as the biggest ‘primary dealer’ in the economy and functions on commercial basis. It deals in all kinds of instruments in the money market without any upper ceiling. Operating in ‘two way’ (as a lender and borrower) its objective is to provide needful liquidity and stability in the financial market of the country.