What changed
The repo rate under the Liquidity Adjustment Facility (LAF) was reduced by 25 basis points from 8.00% to 7.75% with immediate effect. Consequently, the interest rate on standing liquidity facilities—Export Credit Refinance (ECR), Special Export Credit Refinance (SECR) for banks, and collateralised liquidity support for Primary Dealers—was aligned to the new repo rate of 7.75%.
What it means for you
Banks and Primary Dealers will now pay lower interest on funds accessed through these standing facilities, directly reducing their cost of liquidity. This should ease short-term funding pressures and support credit flow, especially for export-oriented sectors. The cut signals RBI's accommodative stance to stimulate economic activity.
What you must do
- Update internal systems to reflect the new 7.75% rate for ECR, SECR, and PD liquidity support.
- Reassess liquidity management strategies to take advantage of cheaper standing facility borrowings.
- Communicate the rate change to treasury and credit teams for accurate pricing of export credit products.
- Monitor LAF operations to optimize usage of the revised facility rates.
Who it affects
All scheduled banks (excluding RRBs), Primary Dealers, Export credit borrowers (indirectly through lower ECR/SECR costs)
Which standing facilities are impacted by this repo rate cut?
The Export Credit Refinance (ECR), Special Export Credit Refinance (SECR) for banks, and collateralised liquidity support for Primary Dealers are all now available at the revised repo rate of 7.75%.
When does the new rate become effective?
The revised rate of 7.75% is effective from January 29, 2013, the date of the Third Quarter Review of Monetary Policy 2012-13.
Are Regional Rural Banks (RRBs) covered by this change?
No, the circular explicitly excludes Regional Rural Banks (RRBs) from the scope of this notification.