All India Financial Institutions

India has commercial banks. It also has a few specialised, long-term lenders. Each one funds a particular sector — exports, farming, housing, or small industry.

The workbook groups four of these lenders under one label: All India Financial Institutions, or AIFIs. They are Exim Bank, NABARD, NHB and SIDBI.

The label matters for two things in this paper. First, it decides how these institutions are treated when they trade Interest Rate Derivatives. Second, it gives them their own rule for how long they may borrow through a Certificate of Deposit — different from an ordinary bank's rule.

As IRD participants. The workbook's definitions list AIFIs, viz., Exim Bank, NABARD, NHB and SIDBI, as one of the categories that automatically counts as a non-retail user for Rupee Interest Rate Derivatives — alongside RBI-regulated entities generally, insurance companies, mutual funds and pension funds, and companies or entities with a net worth of Rs 500 crore (Rs 5 billion) or above. Non-retail user status matters because the lighter safeguards built for institutional-scale participants apply, rather than the retail-investor protections.

As money-market issuers. Companies, including NBFCs and AIFIs, are eligible to issue Commercial Paper, subject to any bank facility they have availed being classified as a standard asset at the time of issue.

A wider CD window. Ordinary Certificates of Deposit issued by banks run for up to one year. The workbook gives AIFIs a different band entirely: not less than 1 year and not exceeding 3 years from the date of issue — a longer minimum and a longer permitted maximum than a bank's own CD.

NABARD wants to raise short-term funds. It has two instruments to choose from under the workbook's rules.

If NABARD issues a Certificate of Deposit, the tenor must fall between 1 and 3 years — it cannot issue a 9-month CD, even though a commercial bank routinely could, because the AIFI-specific CD band starts at 1 year, not below it.

Separately, if NABARD enters a Rupee Interest Rate Derivatives transaction — say, an interest rate swap of Rs 300 crore notional to manage the rate risk on its lending book — it participates as a non-retail user by virtue of being a named AIFI, the same category a large insurance company or a Rs 600-crore-net-worth corporate would fall into, without needing to separately establish net worth or scale to qualify.

Chapter 1 (Introduction to Interest Rate, Interest Rate Instruments and Fixed Income Market), in the money-market instruments section, names AIFIs as eligible CD issuers with their own 1-to-3-year tenor band. Chapter 8 (Regulatory Environment for Exchange Traded IRD), in its "Important Definitions," names the same four institutions as part of the non-retail user category. Expect a direct-recall question naming Exim Bank, NABARD, NHB and SIDBI, and a question on the AIFI CD tenor band versus a bank's.

• Only four institutions carry this label in the workbook — Exim Bank, NABARD, NHB and SIDBI — not "any" development finance institution.
• AIFI CDs run 1 to 3 years; ordinary bank CDs are capped at 1 year. A question swapping these two ranges is testing exactly this contrast.
• Being named an AIFI makes an institution a non-retail user automatically — it does not need to separately show the Rs 500 crore net worth threshold that applies to ordinary companies.
• Non-retail user status is about which regulatory safeguards apply, not an exemption from margin, reporting or position-limit rules.