Discount and Finance House of India

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.