RBI to infuse Rs 1 lakh crore through term repo auction

By: |
Updated: Mar 23, 2020 5:07 PM

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

RBI, coronavirus outbreak, repo auction, coronavirus outbreak, financial market conditions, rep rate, LTROThe first tranche of term repo worth Rs 50,000 crore was conducted on Monday, while the second tranche of the same amount will be conducted on Tuesday.

In a bid to provide additional liquidity to the system hit by the coronavirus outbreak, the Reserve Bank of India (RBI) on Monday decided to inject Rs 1 lakh crore and assured such move further also if required.

The first tranche of term repo worth Rs 50,000 crore was conducted on Monday, while the second tranche of the same amount will be conducted on Tuesday. As a pre-emptive measure to meet any frictional liquidity requirements on account of dislocations due to the coronavirus outbreak, the RBI has decided to conduct the fine-tuning variable rate repo auctions for Rs 1 lakh crore, the central bank said in a statement.

The RBI’s move is aimed at providing cheaper money to banks at the repo rate, thus improving liquidity in the banking system. “The Reserve Bank is monitoring the evolving financial market conditions. The Reserve Bank will calibrate its operations to meet any need for additional liquidity support, if warranted, to ensure normal functioning of markets, promote staff welfare and preserve financial stability,” it said.

As a special case, standalone primary dealers will be allowed to participate in these auctions along with other eligible participants.

Banks would be required to place their requests for the amount sought under long-term repo operation (LTRO) during the window timing at the prevailing policy repo rate. Bids below or above policy rate will be rejected.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1RBI’s on-tap TLTRO begins; why these 5 sectors were selected, and how they will drive India’s growth
2Indians’ wealth rises amid coronavirus crisis; Credit Suisse tells how much it may further grow
3Rural India surprises with job loss amid peak harvesting season in October; labour market stagnates