DISCOUNT HOUSE

DISCOUNT HOUSE
• are the commercial org set up in the form of independent public companies.
• A discount house is a money lender that participates in the buying and
discounting of bills of exchange and other financial products such as money
market securities, certain government bonds, and banker's acceptances
 (BA).
• These are the expert financial intermediaries.
• Function—
• Business of lending and borrowing
• Operates as dealer, brokers , commission agents and earn their revenue
from these activities.
• Operate both in primary and secondary market
• Deals in bills of exchange , CDs , Govt dated securities , T-bills etc.
• Lend to both private and public sector through commercial bills
 DISCOUNT AND FINANCE HOUSE OF INDIA
(DFHI)
• DFHI was incorporated in March 1988 and it commenced operation in April
1988
• The paidup capital of Rs. 200 crores contributed jointly
by RBI, Public Sector Banks and all India Financial Institutions in the
proportion of 5:3:2
• The main objective of increasing the transaction in or turnover of the
money market assets.
• To promote secondary market in short term money market instrument.
• To facilitate the smoothening of the short term liquidity imbalance by   and
integrating the various segment of money market.
• To discount, purchase & sale treasury bills, trade bills, bills of exchange,
commercial bills and commercial papers.
•  
• Also provides facility to open SGL account with
RBI to enjoy the benefits of investment in G-sec.
• Call Money Market: DFHI has been permitted by
the RBI to operate in the inter-bank call money
market, both as lender and borrower of overnight
call and notice money up to 14 days.
• It was accredited as a Primary Dealer in Feb 1996.
• Example – SBI DFHI
 SBI DFHI Limited
• SBI DFHI Ltd is a Primary Dealer, an institution created by RBI to
support the book building process in Primary Auctions of
Government securities and provide necessary depth and liquidity to
the Secondary market in Government Securities.
• It is a market leader in the Primary Dealer segment of the domestic
debt market, with a Net Worth of Rs. 891.38 crore (as on 31st March
2018) and a presence in all major financial centres of the country.
• As Primary Dealers,trade in Fixed Income Securities (Treasury Bills,
Government securities, State Development Loans, Non SLR Bonds,
Corporate Bonds) and Short Term Money Market instruments
(Certificates of Deposit, Commercial Paper, Inter-Corporate
Deposits, Call & Notice Money Deposits).
 SECURITIES TRADING CORPORATION OF
INDIA (STCI)
• The RBI, jointly with public sector banks and All India Financial Institutions,
originally promoted Securities Trading Corporation of India in May 1994 with
the objective of fostering an active secondary market in G-SEC and Public
Sector bonds.
• STCI has been authorized as a PD in G-sec market.
• With a view to diversify, the Primary Dealership business was demerged into
its wholly owned subsidiary, STCI Primary Dealer (STCI-PD) in 2007 and
Securities Trading Corporation of India converted itself into an NBFC and
lending activity has become its core business.
• The core activities of STCI PD comprise of underwriting, bidding, market
making and trading in Government Securities.
• As a Primary Dealer the Company is also allowed to participate and trade in
STRIPS, Interest Rate Derivatives, When Issued market and undertake short
selling in G-Secs on NDS OM.
• STCI PD is a leading player in the retail and mid-segment of the debt
market with a large and diversified client base.
• STCI Finance Ltd (formerly Securities Trading Corporation of India
Limited), is a Systemically Important Non-Deposit taking NBFC
registered with Reserve Bank of India (RBI). Presently STCI Finance Ltd
is classified as a loan NBFC.
• Since year 2007, the Company has been undertaking lending and
investment activities with its main focus on lending/ financing
activities.
• STCI Finance Limited is a diversified mid-market B2B NBFC offering its
product and services across multiple locations in the areas of Capital
Markets, Real Estate, Corporate Finance and Structured Finance.
 DIFFERENCE BETWEEN DFHI AND STCI

• DFHI was set up with T-bills as its main

business portfolio but STCI was set up with
long dated G-sec
• DFHI is a wholesale dealer but STCI targets
retail market.
• DFHI is more a broker than a market maker
but STCI is more a market maker than a
broker.