What changed
The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 5.75% to 6.0% with immediate effect. Accordingly, the standing liquidity facilities provided to banks and primary dealers are now priced at the new repo rate of 6.0%.
What it means for you
Banks and primary dealers will face higher costs for accessing standing liquidity from the RBI, as the rate for export credit refinance and collateralised liquidity support has risen. This move signals tighter monetary policy, potentially leading to higher lending rates and reduced liquidity in the banking system.
What you must do
- Review your bank's funding costs and adjust lending rates accordingly to maintain margins.
- Reassess the demand for export credit refinance in light of the higher cost.
- Communicate the rate change to treasury and ALCO teams for liquidity planning.
- Monitor RBI's future policy actions for further rate adjustments.
Who it affects
All scheduled banks (excluding RRBs), Primary dealers, Borrowers relying on export credit refinance
What is the new repo rate effective from September 16, 2010?
The repo rate has been increased by 25 basis points to 6.0%.
Which liquidity facilities are impacted by this change?
The standing liquidity facilities for banks (export credit refinance) and primary dealers (collateralised liquidity support) are now available at the revised repo rate of 6.0%.