Introduction
- The Discount and Finance House of India (DFHI) is a money market institution incorporated in March 1988 and it commenced operation in April 1988.
- The prime objective of DFHI is to facilitate smoothening of the short-term liquidity imbalances by developing an active secondary market for the money market instruments.
- It was established based on the recommendation of the Vaghul Committee.
- In 2004, the Reserve Bank of India (RBI) transferred its total holding to SBI Giltz Limited. Its new name is SBI DFHI
Major Functions on DFHI
- DFHI participates in transactions in all the money market segments.
- It borrows and lends in the call, notice and term money market, purchases and sells treasury bills sold at auctions, commercial bills, CDs and CPs.
- DFHI quotes its daily bid (buying) and offer (selling) rates for money market instruments to develop an active secondary market for all these.
- DFHI fills this gap by buying and selling these bills in the secondary market.
- The presence of DFHI in the secondary market has facilitated corporate entities and other bodies to invest their short-term surpluses and to en cash them when necessary.