What changed
The repo rate under LAF was reduced from 7.50% to 7.25%, a 25 bps cut. Consequently, the interest rate on standing liquidity facilities—Export Credit Refinance, Special Export Credit Refinance for banks, and collateralised liquidity support for Primary Dealers—was aligned to the new repo rate of 7.25% with immediate effect.
What it means for you
Banks and Primary Dealers will pay lower interest on liquidity availed under these standing facilities, directly reducing funding costs. This supports better margins on export credit and overall liquidity management. The cut signals RBI's accommodative stance, encouraging lending and economic activity.
What you must do
- Update your treasury systems to reflect the new 7.25% rate on ECR, SECR, and PD liquidity facilities.
- Review your export credit pricing and pass on the benefit to borrowers to stay competitive.
- Reassess your liquidity contingency plans given cheaper access to RBI standing facilities.
- Communicate the rate change to your ALCO and credit teams for immediate operational alignment.
Who it affects
All scheduled banks (excluding RRBs), Primary Dealers, Treasury and ALCO teams, Export credit departments
Which facilities are impacted by this repo rate cut?
The standing liquidity facilities—Export Credit Refinance (ECR), Special Export Credit Refinance (SECR) for banks, and collateralised liquidity support for Primary Dealers—are all now priced at the revised repo rate of 7.25%.
When does the new rate take effect?
The rate change is effective from May 3, 2013, the date of the Monetary Policy Statement 2013-14.
Are Regional Rural Banks covered by this circular?
No, the circular explicitly excludes Regional Rural Banks (RRBs). Only scheduled banks (excluding RRBs) and Primary Dealers are covered.