What changed
The fixed repo rate under the Liquidity Adjustment Facility was reduced by 25 basis points from 5.0% to 4.75% with immediate effect. Consequently, the standing liquidity facilities provided to banks for export credit refinance and to Primary Dealers for collateralised liquidity support are now priced at the revised repo rate of 4.75%.
What it means for you
Banks and Primary Dealers will now pay lower interest on funds borrowed from RBI under these standing facilities, reducing their cost of liquidity. This rate cut signals RBI's accommodative stance to support credit flow and economic activity during the 2009 slowdown.
What you must do
- Update your treasury systems to reflect the new repo rate of 4.75% for all standing liquidity facility transactions effective April 21, 2009.
- Review your export credit refinance availed and ensure interest calculations align with the revised rate.
- Communicate the rate change to relevant treasury and credit teams for accurate pricing of linked products.
Who it affects
All scheduled banks (excluding RRBs) availing export credit refinance, Primary Dealers using collateralised liquidity support, Treasury departments managing LAF operations
What is the new repo rate effective from April 21, 2009?
The fixed repo rate under LAF has been reduced by 25 basis points to 4.75% per annum.
Which facilities are impacted by this rate change?
Standing liquidity facilities for banks (export credit refinance) and Primary Dealers (collateralised liquidity support) are now available at the revised repo rate of 4.75%.