**Policy Summary:**
RBI/2016-2017/268 FMOD.MAOG. No. 118/01.01.001/2016-17, dated April 06, 2017, addresses Liquidity Adjustment Facility (LAF) Repo and Reverse Repo Rates. Issued to all Scheduled Commercial Banks (excluding RRBs), Scheduled Urban Cooperative Banks, and Standalone Primary Dealers, this policy announces the decision of the Monetary Policy Committee (MPC) to maintain the Repo rate under the LAF unchanged at 6.25 percent. However, due to the narrowing of the LAF corridor, the Reverse Repo rate under the LAF is adjusted to 6.0 percent. This change is effective immediately. All other terms and conditions of the existing LAF Scheme remain unchanged. Contact: Radha Shyam Ratho, Chief General Manager.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also referred to as RBI.
Scheduled Commercial Banks: Banks included in the Second Schedule to the Reserve Bank of India Act, 1934, excluding Regional Rural Banks (RRBs).
Scheduled Urban Cooperative Banks: Urban Cooperative Banks that are included in the Second Schedule to the Reserve Bank of India Act, 1934.
Standalone Primary Dealers: Financial institutions authorized to deal in government securities.
Liquidity Adjustment Facility: A tool used by the Reserve Bank of India (RBI) to manage short-term liquidity in the money market, includes Repo and Reverse Repo.
Repo Rate: The rate at which the Reserve Bank of India lends money to commercial banks against the collateral of government securities.
Reverse Repo Rate: The rate at which the Reserve Bank of India borrows money from commercial banks.
Monetary Policy Committee: A committee of the Reserve Bank of India responsible for setting monetary policy.
RBI/2016-2017/268
FMOD.MAOG. No. 118/01.01.001/2016-17 April 06, 2017
All Scheduled Commercial Banks (excluding RRBs),
Scheduled Urban Co-operative Banks and Standalone Primary Dealers
Madam / Sir,
Liquidity Adjustment Facility – Repo and Reverse Repo Rates
As announced in the First Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the
Monetary Policy Committee (MPC), it has been decided to keep the Repo rate under the
Liquidity Adjustment Facility (LAF) unchanged at 6.25 per cent.
However, consequent upon the narrowing of the LAF corridor, the Reverse Repo rate under the
LAF now stands adjusted at 6.0 per cent.
This change will come into force with immediate effect. All other terms and conditions of the
current LAF Scheme will remain unchanged.
Yours sincerely
(Radha Shyam Ratho)
Chief General Manager