What changed
The repo rate under the Liquidity Adjustment Facility was reduced by 50 basis points from 8.50% to 8.00% with immediate effect from April 17, 2012. Consequently, the standing liquidity facilities provided to scheduled banks (excluding RRBs) and Primary Dealers are now priced at the revised repo rate of 8.00%.
What it means for you
Banks and Primary Dealers will pay lower interest on funds accessed via export credit refinance and collateralised liquidity support, directly reducing their cost of funds. This should ease short-term liquidity pressures and potentially support lower lending rates for exporters and other borrowers.
What you must do
- Update internal systems to reflect the new 8.00% rate on standing liquidity facilities effective April 17, 2012.
- Review and adjust pricing of export credit products to pass on the benefit of lower refinance costs.
- Communicate the rate change to treasury and credit teams for accurate liquidity planning.
- Monitor LAF operations to optimize usage of the cheaper standing facilities.
Who it affects
All scheduled banks (excluding Regional Rural Banks), Primary Dealers, Export credit borrowers
What is the new repo rate effective from April 17, 2012?
The repo rate was reduced by 50 basis points from 8.50% to 8.00% with immediate effect.
Which standing liquidity facilities are impacted by this change?
Export credit refinance for banks and collateralised liquidity support for Primary Dealers are now available at the revised repo rate of 8.00%.
Are Regional Rural Banks covered under this circular?
No, the circular explicitly excludes Regional Rural Banks (RRBs) from its scope.