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  Business   In Other News  08 Feb 2020  RBI to conduct long-term repo operations on Feb 17, 24 for Rs 50,000 cr

RBI to conduct long-term repo operations on Feb 17, 24 for Rs 50,000 cr

PTI
Published : Feb 8, 2020, 12:38 pm IST
Updated : Feb 8, 2020, 12:38 pm IST

There will be no restriction on the maximum amount of bidding by individual bidders.

Currently, the repo operations are of short-term, usually of overnight, wherein banks can borrow money from the RBI at the prevailing repo rate.
 Currently, the repo operations are of short-term, usually of overnight, wherein banks can borrow money from the RBI at the prevailing repo rate.

Mumbai: The Reserve Bank of India (RBI) will begin the first tranche of its long-term repo operations on February 17 with three-year repo of Rs 25,000 crore, followed by another on February 24 for an equal amount.

The operations date is announced a day after the RBI's monetary policy wherein it said long-term repos aggregating up to Rs 1 lakh crore will be conducted in tranches from mid-February to ease liquidity in the system.

The RBI move is aimed at providing cheaper money to banks at the repo rate and, thus, improve liquidity in the banking system.

Currently, the repo operations are of short-term, usually of overnight, wherein banks can borrow money from the RBI at the prevailing repo rate.

As announced in the statement on 'Developmental and Regulatory Policies' on February 6, 2020, it has been decided to conduct Long Term Repo Operations (LTROs) for one-year and three-year tenors for up to a total amount of Rs 1 lakh crore at the policy repo rate, the RBI said in a release on Friday

In this connection, the 3-year repo operations for an amount of Rs 25,000 crore will be conducted on February 17. While the 1-year repo operation will be conducted for the same amount on February 24, RBI said.

The details of remaining LTROs will be announced in due course, the RBI said further.

These LTROs will be in addition to the existing liquidity adjustment facility (LAF) and marginal standing facility (MSF) operations, the RBI said adding that the total amount of liquidity injected through these operations would be up to Rs 1 lakh crore.

LTROs will be conducted on the CBS (E-KUBER) platform. The operations would be conducted at a fixed rate, the RBI said.

Banks would be required to place their requests for the amount sought under LTRO during the window timing at the prevailing policy repo rate. Bids below or above policy rate will be rejected, it added. "In case of over-subscription of the notified amount, the allotment will be done on a pro-rata basis. RBI will, however, reserve the right to inject marginally higher amount than the notified amount due to rounding effects."

The minimum bid amount would be Rs 1 crore and multiples thereof. There will be no restriction on the maximum amount of bidding by individual bidders.

Tags: rbi, long term repo, interest rate
Location: India, Maharashtra, Mumbai (Bombay)