Cabinet nod to Amendment of RBI Bill, 2005

New Delhi, Mar 23 (UNI) The Union Cabinet today gave its approval to move an amendment in the Reserve Bank of India (Amendment) Bill, 2005 that would accept expressions of 'Repo' and 'Reverse Repo' to bring about conformity with market usage world over.

It has been felt that it would be approporiate to change the definitions to reflect the perspective of the market which would be in line with the modifications that has been recommended by the Standing Committee of Parliament on Finance, Parliamentary Affairs Minister Priya Ranjan Dasmunsi said after the CCEA meeting here.

The cabinet approval for the amendment incorporates the first recommendations of the Standing Committee of Parliament on Finance which states that modifications to the definitions of the expressions 'Repo' and 'Reverse Repo' are t be accepted, as this would bring about conformity with market usage and the common practice followed internationally.

'Repo' and Reverse Repo' represents two sides of the same transaction between two parties that involve borrowing and lending of funds.

In other words, what is 'Repo' from the prespective of one party is 'reverse Repo' for the other and vice vera.

The definitions of 'Repo' and 'Reverse Repo' in the Bill reflected the perspective of RBI in transactions in which RBI itself is a party.

UNI/RT ARB VC1822