What changed
RBI announced a new SRF for scheduled commercial banks (excluding RRBs) effective November 3, 2008. Banks can borrow up to 1% of their NDTL as on October 24, 2008, at the prevailing repo rate (7.5%). The facility is for 90-day tenors, with flexible drawdown and repayment, and limits remain unchanged until further notice.
What it means for you
This SRF provides banks with additional liquidity at the repo rate, helping them manage short-term funding needs against eligible loans. Banks must ensure their outstanding under this facility is repaid within 90 days, or RBI will debit their account; persistent defaults may lead to withdrawal of the facility. It supports lending for bonafide commercial, trade, and agricultural purposes.
What you must do
- Assess your bank's NDTL as on October 24, 2008, to determine the maximum eligible refinance amount (1% of NDTL).
- Prepare and execute a demand promissory note (Proforma I) covering the principal and interest at repo rate.
- Submit a declaration (Proforma II) confirming that loans and advances for bonafide commercial/trade/agricultural purposes exceed the refinance amount.
- Ensure any SRF drawdown is fully repaid within 90 days from first utilisation to avoid automatic debit or facility withdrawal.
- Confirm acceptance of terms to the concerned RBI office to initiate the facility.
Who it affects
All Scheduled Commercial Banks (excluding Regional Rural Banks), Bank treasury and liquidity management teams, Bank credit departments handling commercial and agricultural loans
What is the interest rate on the SRF?
The SRF is provided at the repo rate under LAF, which was 7.5% effective November 3, 2008.
How long can we keep the refinance outstanding?
The facility is for a maximum of 90 days from the first day of utilisation. You can draw and repay flexibly within this period, but all outstandings must be repaid by the 90th day.
What happens if we fail to repay within 90 days?
RBI will debit your account for the outstanding amount. Persistent defaults may lead to withdrawal of the SRF for your bank.