RBI Releases Draft Master Direction on Call, Notice and Term Money Markets, 2026

The Reserve Bank of India (RBI) has put out a draft set of rules called the Master Direction - Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2026. The draft was released for public consultation, and the RBI has invited comments and suggestions from banks, market participants and other interested groups up to 17 July 2026. After studying the feedback, the central bank will issue the final rules.

To understand why this matters, it helps to know what these markets are. The call money, notice money and term money markets are part of the larger "money market" - the place where banks and other approved institutions lend and borrow money for very short periods. In the call money market, funds are lent for just one day (overnight). In the notice money market, the loan runs from 2 to 14 days. In the term money market, the borrowing period is longer than 14 days. Banks use these markets mainly to manage their day-to-day cash needs and to meet reserve requirements.

The RBI says a more active term money market gives participants another way to raise funds and, importantly, improves "monetary policy transmission" - that is, it helps changes in the RBI's policy interest rate flow through more smoothly to longer-term interest rates in the economy. The draft tries to deepen this market by raising the borrowing limits for standalone primary dealers and by widening the set of institutions allowed to take part.

This is part of the RBI's continuing effort to develop India's financial markets and make interest rates respond better to its policy signals. A deeper, more liquid money market is generally seen as a sign of a maturing financial system. The move was first announced in the RBI's Statement on Developmental and Regulatory Policies dated 8 April 2026, and the draft is the follow-up to that announcement.

For aspirants, remember the difference between call (overnight), notice (2-14 days) and term (over 14 days) money, that these are short-term money market segments regulated by the RBI, and that the goal of the new draft is better monetary policy transmission and a deeper term money market. Also note the consultation process: the RBI floats a draft, seeks public feedback, then issues a final Master Direction.