What changed
The special term repo facility, initially announced on November 3, 2008, is now extended until end-March 2009. Banks can avail this facility on an incremental or rollover basis within their 1.5% of NDTL SLR relaxation entitlement, exclusively for MFs and NBFCs. RBI will conduct daily 14-day term repos up to a cumulative outstanding amount of Rs 60,000 crore.
What it means for you
Banks get continued access to cheap liquidity from RBI at the prevailing repo rate to support mutual funds and NBFCs, easing stress in these sectors. The daily auction mechanism ensures transparent allocation, and the Rs 60,000 crore cap provides a clear ceiling on total support. This extension signals RBI's commitment to maintaining financial stability through the global crisis period.
What you must do
- Assess your bank's SLR headroom up to 1.5% of NDTL for availing this facility.
- Identify MF and NBFC clients needing liquidity support and plan incremental or rollover borrowing.
- Participate in daily 14-day term repo auctions as per RBI press releases for rate and notified amount.
- Ensure funds availed are used exclusively for meeting liquidity requirements of MFs and NBFCs.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Mutual Funds, Non-Banking Financial Companies (NBFCs)
What is the maximum amount I can borrow under this special repo?
The facility has a cumulative outstanding limit of Rs 60,000 crore across all banks. Each bank's individual entitlement is up to 1.5% of its NDTL, as per the SLR relaxation.
Can I use this facility for purposes other than MFs and NBFCs?
No, the funds must be used exclusively for meeting the liquidity requirements of mutual funds and NBFCs.
How long will this facility be available?
The facility is available daily until end-March 2009, with 14-day tenor repos conducted each day.