Question

Analyse the nature discount and finance house of india

Answer 1

Pursuant to the Vaghul Working Group recommendation for setting up an institution to provide enhanced liquidity to the money market instruments, the RBI set up the Dis­count and Finance House of India (DFHI) jointly with public sector banks and the all-India financial institutions.

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.

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