With this development, only three applicants -- Deutsch Bank, Kotak Mahindra Capital Company and DSP Merrill Lynch--are hanging on the sidelines with "in-principle clearances". The RBI had given in-principle clearances to seven outfits to become PDs. Today's clearance paves the way for ten PDs in the primary government debt market in India.

Of the four that have been given the final clearance, two of them -- Ceat Financial and Tata Finance were already operating as satellite dealers (SDs). SDs form the second rung of players in the government securities market. Incidentally, JP Morgan which has tied up with the Khaitans for a 25 per cent stake has already started its operations from yesterday. Dealers welcomed the RBI move to appoint four more entities as PDs as this is likely to provide additional depth to the government securities market.

"The move will impart further liquidity in an ever-expanding government securities market," Sandipan Deb, debt analyst in ICICI-Securities, said. I-Sec is one of the six PDs currently operating in the securities market. Other PDs include the Discount and Finance House of India, Securities Trading Corporation of India, PNB Gilts, Gilts Securities Trading Corporation and SBI Gilts.

The appointment of four more PDs will also see the gradual disappearance of the RBI from the primary government securities market. The apex bank has for long been a player in the gilts market and has for the past four years tried to phase out its presence by appointing PDs which will be the primary players in the gilts market.

The central bank will also gradually phase out the commissions that is doled out to the PDs. As per an underwriting agreement reached between the PD and the RBI, the central bank gives commission to the PDs which has turned out to be a major contributor to the PDs profitability. Besides, the PDs can also play in the money market and the move to allow four more entities will only add further depth to the inter-bank call money market.

Primary dealers said that the appointment of four more PDs will see a further capital infusion of Rs 200 crore into the debt market. "With the government borrowings expected to go up further during the next financial year the four new entities will only add to greater trading opportunities", a source at a PD said.