RBI closes the special liquidity tap
27 Oct 2009
Keeping in view the low utilisation of the various liquidity facilities open to banks and taking into account the current liquidity conditions in the market, RBI has proposed to reduce the limit of export credit refinance facility from 50 per cent to 15 per cent of eligible outstanding rupee export credit.
RBI said it will also discontinue the special refinance facility for scheduled commercial banks, the special term repo facility for scheduled commercial banks for funding to mutual funds, non-banking financial companies and housing finance companies and the forex swap facility of banks.
The refinance facility to SIDBI, NHB and EXIM Bank will, however, continue to be in operation till the pre-announced date of 31 March 2010.
However, these three financial institutions (FIs) will have to ensure that all outstandings are repaid by the close of business on 31 March 2010.
The RBI has been providing liquidity facility to banks and financial institutions under export credit refinance (ECR) facility (limit up to 50 per cent of eligible outstanding rupee export credit); special refinance facility for scheduled commercial banks (limit up to one per cent of net demand and time liabilities as of 24 October 2008); special term repo facility to scheduled commercial banks for funding to mutual funds (MFs), non-banking financial companies (NBFCs) and housing finance companies (HFCs) (limit is in terms of relaxation in the statutory liquidity ratio (SLR) up to 1.5 per cent of NDTL); to Small Industries Development Bank of India (SIDBI), National Housing Bank (NHB) and Export- Import Bank of India (EXIM Bank) as also forex swap facility to banks for tenors up to three months.
Government securities market
