Discount And Finance House of India Ltd (DFHI)DFHI was set up in March 1988 by Reserve Bank of India jointly with publicsector banks and all India Financial Institutions to develop the money marketand to provide liquidity to money market instruments as a sequel to VaghulWorking Group recommendations.
What is the function of discount and Finance House of India?
DFHI was incorporated in March 1988 and it commenced operation in April 1988. The main objective of this money market institution is to facilitate smoothening of the short-term liquidity imbalances by developing an active secondary market for the money market instruments. Its authorized capital is Rs. 250 crores.
How does a discount house work?
Discount houses borrowed funds from commercial banks through short-term securities at a lower (below the market) rate and lent the received funds to borrowers at a higher price. The difference served as the discount house’s profit. The Bank of England (BoE) worked with discount houses to regulate the money supply.
What is DFHI in money market?
Establishment of the DFI : The Discount and Finance House of India (DFHI) was set up in April 1988 to impart liquidity in the money market. It was set up jointly by the RBI, Public sector Banks and Financial Institutions.
What is meant by DFHI?
What does DFHI mean? The Discount and Finance House of India (DFHI) is a unique institution of its kind, was set up in April 1988, by Reserve Bank of India jointly with public sector banks and all India Financial Institutions to help develop the money market in India.
Which is the main function of DF hi?
Functions and Role of DFHI 1. To discount, rediscount, purchase and sell treasury bills, trade bills of exchange, commercial bills and commercial papers. … To advise Government, banks, and financial institutions involving schemes for growth and development of money market.
What are the advantages of discount houses?
They give discounts by reducing their overhead cost and by buying in bulk.
Features of discount houses are;
- Offer low price.
- Operate on a discount basis.
- Purchase is on a cash basis.
- Low mark-up.
- Wide variety of goods are stocked.
What is a discount market?
: an open market in which negotiable instruments (as acceptances, bills, and notes) are discounted — compare bank discount.
What are issuing houses?
noun. British a financial institution that engages in finding capital for established companies or for private firms wishing to convert to public companies, by issuing shares on their behalf.
Who controls the money market?
Money Market is a segment of the financial market in India where borrowing and lending of short-term funds take place. The maturity of money market instruments is from one day to one year. In India, this market is regulated by both RBI (the Reserve bank of India) and SEBI (the Security and Exchange Board of India).
What are the types of money market?
Following are the types of Money Market Instruments:
- Promissory Note: A promissory note is one of the earliest type of bills. …
- Bills of exchange or commercial bills. …
- Treasury Bills (T-Bills) …
- Call and Notice Money. …
- Inter-bank Term Market. …
- Commercial Papers (CPs) …
- Certificate of Deposits ( CD’s ) …
- Banker’s Acceptance (BA)
What are features of money market?
Features of Money Market Instruments
- High Liquidity.
- Fixed returns.
- Maintains Liquidity in the Market.
- Provides Funds at a Short Notice.
- Helps in monetary policy.
- Treasury Bills (T-Bills)
- Commercial Papers.
- Certificates of Deposits (CD)