What changed
RBI announced term repo auctions of 7-day and 14-day tenor, with total liquidity injection capped at 0.25% of banking system NDTL. Auctions will be held on alternate Fridays: 14-day on reporting Fridays and 7-day on non-reporting Fridays, using a variable rate mechanism on the E-KUBER platform.
What it means for you
Banks get a new avenue to borrow funds for longer tenors (7 or 14 days) at market-determined rates, supplementing the overnight LAF and MSF. This helps banks manage liquidity mismatches more flexibly, especially around reporting dates. The variable rate auction ensures pricing reflects demand, and the cap limits systemic exposure.
What you must do
- Register for electronic bidding on the E-KUBER platform for term repo auctions.
- Monitor RBI announcements on notified amounts and auction timings (Fridays, 2:30-3:00 PM).
- Prepare bids with term repo rates in percentage terms up to two decimal places, ensuring rates are above the prevailing LAF repo rate.
- Ensure minimum bid amount of Rs 1 crore and multiples thereof for participation.
- Adjust liquidity planning considering that term repo reversals occur at start of day on maturity.
Who it affects
All scheduled commercial banks (excluding RRBs), Treasury and liquidity management teams, ALCO desks
What is the minimum bid amount for term repo auctions?
The minimum bid amount is Rs 1 crore, and allotments are in multiples of Rs 1 crore.
When will the first term repo auction be held?
The first auction is for 7-day tenor on October 11, 2013, with the notified amount announced on October 10, 2013.
Can banks bid for amounts above the notified amount?
There is no restriction on the maximum bid amount per bidder, but total allotment is capped at the notified amount (0.25% of NDTL).