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Major Revisionof Liquidity

The Reserve Bank of India announced changes to its liquidity management framework. Ten different liquidity facilities were outlined, including short-term repo and reverse repo auctions, variable rate term repos, fixed rate reverse repos, and more. The amounts and periodicity of these facilities will be determined by RBI based on its assessment of liquidity conditions. These changes to RBI's liquidity facilities will take effect on February 14, 2020.

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44 views1 page

Major Revisionof Liquidity

The Reserve Bank of India announced changes to its liquidity management framework. Ten different liquidity facilities were outlined, including short-term repo and reverse repo auctions, variable rate term repos, fixed rate reverse repos, and more. The amounts and periodicity of these facilities will be determined by RBI based on its assessment of liquidity conditions. These changes to RBI's liquidity facilities will take effect on February 14, 2020.

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Nitu Pathak
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Home About Us Notifications Press Releases Speeches Publications Memorial Lectures Mint Street Memos Research Statistics

PRESS RELEASES
(328 kb)
Date : Feb 06, 2020
Liquidity facilities under revised Liquidity Management Framework
The revised Liquidity Management Framework has been announced in the Statement of Developmental and Regulatory Policies on February 06, 2020.
Accordingly, RBI liquidity facilities under the revised Liquidity Management Framework would be as under:

Sl.
Instrument Quantum Periodicity/Timing
No.
A. Instruments under LAF framework to manage short-term/transient liquidity
1. 14-day variable-rate repo/reverse repo auction Auction amount will be decided by the Reserve Bank On reporting Friday (2.30 PM – 3.00
(Main operation) and a single auction (either repo or reverse repo) will PM)
be conducted based on the assessment of liquidity
conditions by the Reserve Bank. (If reporting Friday is a holiday, the
auction will be conducted on preceding
working day in Mumbai)
2. Variable Rate Term Repo/Reverse Repo auction The auction amount will be decided by the Reserve Discretionary
(Tenor: overnight and up to 13 days) (Fine-tuning Bank, based on an assessment of the liquidity
operations) conditions.
3. Fixed Rate Reverse Repo No restriction on amount Daily (Including Saturdays, Sundays and
4. Marginal Standing Facility (MSF) Individual banks can draw funds up to Excess SLR + 2 holidays) between 5.30 PM and 11.59
per cent below SLR. PM
5. FX Swaps The amount will be decided by the Reserve Bank, Discretionary
based on the assessment of the liquidity conditions
6. Standing Deposit Facility (SDF) The operational details of Standing Deposit Facility (SDF) will be issued separately.
B. Instruments to manage durable liquidity
7. Long Term Variable Rate Repo (LTR) The auction amount will be decided by the Reserve Discretionary
Bank, based on an assessment of the liquidity
Tenor: beyond 14 days conditions.
8. Long Term Variable Rate Reverse Repo (LTRR)

Tenor: beyond 14 days


9. FX Swap Auctions The auction amount will be decided by the Reserve Discretionary
Bank, based on an assessment of the liquidity
10. Open Market Operations (OMOs)
conditions.
2. The following points may also be noted for fixed-rate reverse repo and MSF operations:

(i) As advised vide RBI press release 2015-2016/1231 dated November 24, 2015, physical submission of bids would not be entertained.

(ii) The reversal of these operations will take place as is currently being done.
(iii) The results of these operations will be published in the Money Market Operation (MMO) press release.

3. These changes will come into effect from February 14, 2020 (Friday).
(Yogesh Dayal)
Chief General Manager
Press Release: 2019-2020/1900

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