What changed
The RBI has discontinued the Special Refinance Facility (SRF) under Section 17(3B) of the RBI Act, 1934, effective October 27, 2009. This facility previously allowed scheduled commercial banks (excluding RRBs) to avail refinance up to 1.0% of their NDTL as on October 24, 2008, at the repo rate for up to 90 days.
What it means for you
Banks lose access to a low-cost liquidity window that was available at the repo rate. Outstanding borrowings under this facility must be repaid within the original 90-day period from the first utilisation date, as per the November 3, 2008 circular. This signals RBI's confidence in systemic liquidity and a gradual withdrawal of crisis-era support.
What you must do
- Stop availing any fresh refinance under the SRF immediately.
- Ensure all outstanding SRF amounts are repaid within 90 days from the first utilisation date.
- Review your bank's liquidity position to adjust for the loss of this facility.
- Monitor RBI's future liquidity management operations for alternative funding options.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Treasury and liquidity management teams at banks, Banks that had outstanding borrowings under the SRF
What was the Special Refinance Facility (SRF)?
The SRF allowed scheduled commercial banks (excluding RRBs) to borrow from RBI up to 1.0% of their NDTL as on October 24, 2008, at the repo rate for a maximum of 90 days, with flexible draw and repayment.
What happens to existing SRF borrowings after discontinuation?
Any outstanding amounts under the SRF must be repaid within the stipulated 90-day period from the first day of utilisation, as per the original circular dated November 3, 2008.
Why did RBI discontinue the SRF?
The discontinuation was announced in the Second Quarter Review of Monetary Policy 2009-10, indicating RBI's view that the emergency liquidity support was no longer needed.