What changed
RBI introduced a temporary special repo window of Rs 25,000 crore exclusively for banks to meet mutual fund liquidity needs. The facility is separate from existing LAF and MSF operations. It offers a 3-day tenor at 10.25% interest, with bids placed electronically on the CBS platform.
What it means for you
Banks can now access additional liquidity specifically for mutual funds, easing redemption pressures. The SLR waiver of up to 0.5% of NDTL (on top of the 2% MSF waiver) reduces penalty costs for liquidity shortfalls. This temporary measure helps stabilize money markets during stress.
What you must do
- Ensure funds from this special repo are used exclusively for mutual fund liquidity needs.
- Place bids electronically on the CBS platform during the specified window (2:30-3:00 PM).
- Track SLR shortfall waivers: up to 0.5% of NDTL under this facility, in addition to MSF waiver.
- Prepare for 3-day tenor operations with reversal on the third day (excluding Saturdays and holidays).
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Mutual funds seeking liquidity support, Treasury and ALM desks of banks
What is the interest rate on this special repo?
The rate is 10.25% per annum for the 3-day tenor.
Can banks use these funds for purposes other than mutual funds?
No, the funds must be used exclusively for meeting liquidity requirements of mutual funds.
Is the SLR waiver under this facility additional to the MSF waiver?
Yes, banks can get a waiver of penal interest for SLR shortfall up to 0.5% of NDTL, in addition to the 2% waiver allowed under MSF.