RBI Raises Trading Targets for Primary Dealers to Boost Bond Market Liquidity

• Reserve Bank of India (RBI) has significantly increased trading targets for primary dealers in an effort to deepen liquidity in India’s government bond market and improve overall market activity.
• According to reports, each of the country’s 21 primary dealers has been asked to trade at least ₹4 lakh crore worth of government bonds during the financial year beginning April 2026.
• This marks a sharp increase of nearly 48% compared to the previous year’s target.
• Primary dealers are specialised financial institutions authorised by the RBI to underwrite and trade government securities, helping maintain liquidity and smooth functioning in the sovereign debt market.
• The revised targets have already started impacting trading volumes in the bond market.
• Daily trading volumes in India’s benchmark 10-year government bond rose nearly 40% in April compared to March
• Overall bond market trading increased by around 15% during the same period
• The 10-year government bond is considered the most actively traded and closely watched debt security in India’s financial markets.

About Primary Dealers (PDs)

• Primary Dealers are specialized financial institutions that act as intermediaries between the government and the financial market in the sale and purchase of government securities (G-Secs).
• In India,  there are 21 PDs and they are regulated by the Reserve Bank of India.
• Primary Dealers help the government borrow money smoothly by underwriting and trading government securities such as:

1. Treasury Bills (T-Bills)
2. Government Bonds
3. State Development Loans (SDLs)