Bank of Baroda receives RBI approval to switch from Bank Primary Dealer to set up subsidiary

In a major initiative towards financial management, the state owned Bank of Baroda has received approval from RBI to opt for wholly owned subsidiary for carrying out Standalone Primary Dealer Business.

It has been informed that Bank has received In-Principal approval from the Reserve Bank of India (RBI) for its request to transfer existing Authorization as a Bank Primary Dealer to a proposed wholly owned subsidiary for undertaking Standalone Primary Dealer Business. Standalone Primary Dealer Business will be established subject to other regulatory approvals.

The Bank will make further disclosures as and when there are material developments in the matter, the filing added.

Primary Dealers (PDs) are recognised as for specific financial firms, like major banks or brokers, authorized to buy government securities (bonds, T-bills) directly from a government's debt manager (e.g., Reserve Bank of India, US Federal Reserve) in new issues (primary market) and then resell them, ensuring liquidity and market depth by acting as market makers in the secondary market.

Further, there are two types of Primary Dealers in India:

Bank Primary Dealers: Departments within large commercial banks that undertake PD activities.

Standalone Primary Dealers (SPDs): Non-bank financial companies (NBFCs) or subsidiaries specifically set up for PD business, like SBI DFHI Ltd.