Business

RBI to conduct frequent term repos for flexible cash management

  • Reuters, Mumbai
  • |
  • Updated: Aug 22, 2014 01:24 IST

The Reserve Bank of India (RBI) said it would conduct more frequent term repos but retained the overall borrowing limit for lenders, in a bid to make borrowing more flexible without injecting additional liquidity into markets.

The RBI said it would conduct 14-day term repo auctions four times during a two-weekly reporting cycle, or every Tuesday and Friday, from September 5. The central bank will also conduct 3 to 4-day term repo auctions but only from September 5 to 12.

To further manage liquidity conditions starting next month, the RBI said it could also auction overnight variable rate repos, while saying it could also choose to sell part of the government's cash balances.

Although the intent was to provide more flexible borrowing options for lenders, the impact on bond markets was muted because the RBI continued to cap the total amount lenders can borrow via term repos to 0.75% of lenders' deposits.

 

also read

Samsung talks to BlackBerry about $7.5 billion buyout: Reports

 
blog comments powered by Disqus