What changed
The Monetary Policy Committee raised the policy repo rate by 50 basis points from 4.40% to 4.90% with immediate effect. Consequently, the SDF rate moved to 4.65% and the MSF rate to 5.15%.
What it means for you
Banks will face higher cost of funds from RBI's LAF window, impacting their lending and deposit rates. This signals tighter monetary policy to control inflation, likely leading to higher loan EMIs and deposit rates for customers.
What you must do
- Review and adjust your bank's lending and deposit rate slabs to reflect the new repo rate.
- Communicate the rate change impact to treasury and ALM teams for liquidity planning.
- Update internal systems and customer-facing documents with the revised SDF and MSF rates.
- Prepare for potential increase in borrowing costs and recalibrate loan pricing models.
Who it affects
All LAF participants (banks and primary dealers), Treasury and asset-liability management teams, Retail and corporate loan customers, Deposit holders
What is the new repo rate effective from June 8, 2022?
The repo rate has been increased by 50 basis points to 4.90% with immediate effect.
How have the SDF and MSF rates changed?
The SDF rate is now 4.65% and the MSF rate is 5.15%, both effective immediately.
Are any other terms of the LAF scheme changed?
No, all other terms and conditions of the LAF scheme remain unchanged.