The Hindu Business Line : Overnight fixed rate repo from Aug 16

THE Reserve Bank of India on Friday announced introduction of overnight fixed rate repo at 4.50 per cent under Liquidity Adjustment Facility with effect from August 16, 2004.

The call rates had hardened during the past three days, up to 5.50-5.75 per cent.

Analysts said tightening of liquidity in the inter-bank market has led to this measure being taken by the central bank. It will improve liquidity conditions, as surplus funds will be available in the inter-bank market now as funds could be parked with the RBI for only a day now and could be withdrawn at short notice, they said.

This is in addition to the existing overnight fixed rate reverse repo at 6.00 per cent. The current practice of 7-day Repo and 14-day Repo will also continue, said a RBI release.

The operational guidelines and terms and conditions of the auction under the LAF would be applicable as at present, the release said.

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Overnight fixed rate repo from Aug 16