Special Fixed Repo Rate under Liquidity Adjustment Facility

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Mumbai, Nov 3 (UNI) On a review of current and evolving macroeconomic situation and liquidity conditions in the global and domestic financial markets, Reserve Bank announced further measures, on a purely temporary and ad-hoc basis and subject to review, extending the special term repo facility and allowing banks to avail liquidity support under the LAF through relaxation in the maintenance of SLR to the extent of up to 1.5 per cent of their NDTL.

This relaxation in SLR is to be used exclusively for the purpose of meeting the funding requirements of NBFCs and MFs. Banks can apportion the total accommodation allowed above between MFs and NBFCs flexibly as per their business needs.

Accordingly, Reserve Bank shall conduct the special fixed rate term repo under Liquidity Adjustment Facility every day until further notice up to a cumulative amount of Rs 60,000 crore on outstanding basis. This will subsume the existing Rs 20,000 crore facility announced by RBI on October 14, 2008, the statement issued by RBI said.

Under the extended arrangement, the Reserve Bank of India conducted today a special fixed rate term repo for 14 days at 7.5 per cent per annum for Rs 53,550 crore against eligible securities, due for reversal on November 17, 2008, with a view to enabling banks to meet the liquidity requirements of Mutual Funds (MFs) and Non-Banking Financial Companies(NBFCs), either on incremental or on rollover basis. Of the outstanding amount of Rs 7,995 crore as on October 31, Rs 1,545 crore is due for redemption today.


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