RBI to conduct frequent term repos for better liquidity management

Tags: News
The Reserve Bank today said it would conduct more frequent term repos auctions in order to make borrowing more flexible to meet the liquidity needs.

"With a view to ensuring flexibility and transparency in liquidity management operations, a revised framework for liquidity management is being put in place with effect from September 5, 2014," RBI said in a statement.

On September 5, RBI would conduct 14-day term repo auction for an amount equivalent to one-fourth of 0.75 per cent of net demand and time liabilities (NDTL), it said.

There will be 4-day term repo auction for an amount equivalent to three-fourth of 0.75 per cent of NDTL, it added.

There will be regular rollovers of maturing 14-day term repos on every Tuesday and Friday, it said.

However, overall borrowing limit for banks have been retained for liquidity adjustment facility (LAF).

Banks are currently allowed to borrow up to 0.25 per cent of NDTL from the LAF window.

Under the existing arrangements, day-to-day liquidity requirements are met through variable rate 14-day, 7-day repo auctions equivalent to 0.75 per cent of NDTL of the banking system.

Banks are also allowed to raise through overnight auction of repo at fixed rate that is the repo rate of 8 per cent. A bank is not allowed to borrow more than 0.25 per cent of its NDTL.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Banks might be bracing for intense rate war for retail loans

    While select small banks have been slashing their deposit rates by five to 10 basis points over the past few weeks for short term adjustments to avoid

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

<b>Riskfactor</b>: Intertemporal choices

Intertemporal choice is the study of the relative value people ...

Parvez Imam

Why we all have blood on our hands

What does the Jammu and Kashmir flood make us think? ...

Dharmendra Khandal

The peculiar possibilities of animal poop

You can tell a lot about an animal by its ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture