What changed
The special term repo facility, previously available daily, will now be conducted as a weekly 14-day fixed rate term repo every Monday from April 27, 2009, until March 31, 2010. The cumulative outstanding amount is capped at Rs 60,000 crore. Until April 24, 2009, the facility remains daily with a fixed reversal on April 27, 2009.
What it means for you
Banks get continued access to liquidity support at the repo rate, with SLR relaxation up to 1.5% of NDTL, for on-lending to mutual funds, NBFCs, and HFCs. The weekly auction schedule streamlines operations but requires banks to plan their liquidity needs weekly. The extended timeline until March 2010 signals RBI's commitment to supporting credit flow to these sectors.
What you must do
- Adjust your liquidity management to align with weekly Monday auctions from April 27, 2009.
- Ensure SLR relaxation up to 1.5% of NDTL is utilized for lending to MFs, NBFCs, and HFCs as per business needs.
- Monitor RBI press releases every Monday for notified amounts, rates, and reversal dates.
- Prepare for seamless transition: use daily facility until April 24, 2009, with reversal on April 27, 2009.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Mutual Funds (MFs), Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs)
What is the maximum amount I can avail under this special term repo facility?
The cumulative outstanding amount across all banks is capped at Rs 60,000 crore. Individual bank limits depend on SLR relaxation up to 1.5% of NDTL.
How often will these auctions be held?
Starting April 27, 2009, auctions will be held every Monday. If Monday is a holiday, the reversal occurs on the next working day.
Can I use this facility for incremental or rollover borrowing?
Yes, banks can avail the facility on either an incremental or rollover basis, as per earlier circulars.