RBI allows standalone primary dealers to participate in all repo operations

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The Reserve Bank of India (RBI) on Wednesday allowed standalone primary dealers (SPDs) to participate in all repo operations, irrespective of the tenor, conducted by the central bank.

 

“On a review, it has now been decided to allow SPDs to participate in all repo operations, irrespective of the tenor, conducted by the Reserve Bank,” the RBI said in a notification.

 

Earlier, SPDs were permitted to participate in all overnight liquidity management operations, excluding the Marginal Standing Facility. Additionally, SPDs could participate in other operations, such as long-term Variable Rate Repo (VRR) operations and daily VRRs, on a case-by-case basis.

 

“There is a liquidity crunch, especially because this is March-end, and the deficit could be there going into the next financial year also. So, this only says liquidity can be more easily available for PDs,” said a dealer at a primary dealership.

 

The central bank, on January 15, had announced that it will conduct overnight Variable Rate Repo auctions on all working days in Mumbai, effective until further notice.

 

The central bank also conducted longer-tenure VRRs in order to infuse durable liquidity in the banking system.