What changed
RBI amended the eligible entities list under the Repo in Corporate Debt Securities Directions, 2010 to include IIFCL. Previously, IIFCL was not explicitly mentioned among eligible participants. All other terms and conditions of the original circular remain unchanged.
What it means for you
IIFCL can now use corporate debt repos for liquidity management, potentially deepening the corporate bond repo market. Banks and other eligible counterparties gain a new, creditworthy counterparty for such transactions, which may improve market liquidity and pricing.
What you must do
- Update internal eligibility lists for corporate debt repo counterparties to include IIFCL.
- Review and update risk management and credit limits for transactions with IIFCL.
- Ensure compliance with all existing terms of the Repo in Corporate Debt Securities Directions, 2010.
Who it affects
Scheduled commercial banks (excluding RRBs and LABs), Primary Dealers, Registered NBFCs (other than Government companies), All-India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI), Mutual funds, HFCs, insurance companies (with regulator approval), India Infrastructure Finance Company Limited (IIFCL)
What is a ready forward contract in corporate debt?
It is a repo transaction where one party sells corporate debt securities with an agreement to repurchase them at a future date at a predetermined price, effectively a short-term collateralized loan.
Does this circular change any other conditions for corporate debt repos?
No. All other terms and conditions from the January 8, 2010 circular remain unchanged. Only the list of eligible entities has been expanded to include IIFCL.