1. Effective Date
The SLAF scheme will be made effective from November 28, 2005.
2. Tenor
Under the scheme, (i) Overnight Reverse Repo auctions (for
absorption of liquidity) and (ii) Overnight Repo auctions (for injection of
liquidity) will be conducted on a daily basis (Monday to Friday, excepting holidays).
3. Rate of Interest
Both the reverse repo and repo operations will be conducted
at a fixed rate. The reverse repo rate will be fixed by the Reserve Bank from
time to time. The repo rate will continue to be linked to the reverse repo rate
through a spread as mark up over the reverse repo rate. The spread will be determined
based on market conditions and other relevant factors and changes therein as
when effected will be announced by Reserve Bank.
4. Discretion to Reserve Bank
Under the Scheme, Reserve Bank will continue to have the discretion
to conduct overnight/ longer term reverse repo/ repo auctions at fixed rate
or at variable rates depending on market conditions and other relevant factors.
5. Mechanics of operations
i) The time for submission of bids under SLAF will be from
3.00 p.m to 3.45 p.m. The auction results will be announced by 4.45 p.m.
After the full-fledged operationalisation of the Real Time Gross Settlement(RTGS)
system, these timings will be reviewed.
ii) The bids will be submitted electronically in the Negotiated
Dealing System (NDS). Members of NDS facing genuine systems problem on any
specific day may submit physical bids in sealed cover in the box provided
in Mumbai Office, Reserve Bank of India, by 3.45 p.m. In case of inability
to submit physical bid by 3.45 p.m. in the bid box, intention to submit
physical bid indicating the bid amount must be communicated to the Manager,
Securities Section, Public Accounts Department (PAD), Mumbai Office
by fax (fax No. 022-22620802) before 3.45 p.m. and the bid in a sealed
cover delivered to the Securities Section, PAD by 4.15 p.m. If such physical
bids are not received by 4.15 p.m. the Fax request received intimating bid
amount will be ignored. It may be noted that the facility of fax communication
on intention to submit the physical bid should not be used to circumvent
the time discipline.
iii) The NDS provides for submission of single or multiple
bids by the member. However, as far as possible only one bid should be submitted
by a member.
iv) The Reverse Repo/Repo will be conducted as "Hold-
in- Custody" type, wherein the Reserve Bank will act as a custodian
for the participants and hold the securities on their behalf in the Reverse
Repo/ Repo Constituents SGL Accounts. Pursuant to this, the participants
will have to give an undertaking as given in the respective tender forms
authorising Reserve Bank to act on their behalf. Reserve Bank shall not,
however be responsible for any loss, damage or liability on account of acting
as the Custodian on behalf of the participants. A Reverse Repo Constituents’
SGL Account (RRC SGL Account) and Repo Constituents’ SGL Account (RC SGL
Account) will be opened and held in the Public Accounts Department in Mumbai
Office of the Reserve Bank of India for this purpose. These accounts will
have institution-wise subsidiary records of the securities delivered by
the Reserve Bank under Reverse Repo and securities held for delivery to
the Reserve Bank under Repo. Reserve Bank will also have its own subsidiary
accounts in the case of both of these accounts.
v) On acceptance of bid in respect of Reverse Repos, the tenderer’s
RRC SGL Account will be credited with the required quantum of securities and
Current Account will be debited for the reverse repo amount. The transaction
will be reversed in the second leg.
vi) In the case of Repos, on acceptance of bid, the tenderer’s
RC SGL Account will be debited with the required quantum of securities and Current
Account will be credited with the Repo amount. The transactions will be reversed
in the second leg.
vii) The SLAF transactions between Reserve Bank and counter
parties which would involve operation of the RRC SGL Account and RC SGL Account
would not require separate SGL forms as provision for the purpose has been made
in the bid application. However, transfer from tenderer’s SGL Account to the
RC SGL Account (RC Transfer), or vice versa (RC Withdrawal), will require
completion of SGL Form.
viii) Pricing of all securities including Treasury Bills
will be at face value for Reverse Repo/ Repo operations by Reserve Bank.
Accrued interest as on the date of transaction will be ignored for the purpose
of pricing of securities. Coupon, if any, will be transferred to RBI in
the case of Reverse Repos, and Reserve Bank will collect the coupon, if
any, on the due date and credit the same to the party’s Current Account
in the case of Repos.
ix) Since the securities available in RC SGL Account are
meant only for availing liquidity from Reserve Bank, the system will automatically
transfer the securities once the allotment is complete. Securities falling
under shut period either on the date of transaction or on the date of reversal
will not be eligible for collateral.
6. Eligibility
All Scheduled Commercial Banks (excluding Regional Rural Banks)
and Primary Dealers (PDs) having Current Account and SGL Account with Reserve
Bank, Mumbai will be eligible to participate in the Reverse Repo and Repo auctions.
7. Minimum bid size
Bids will be received for a minimum amount of Rs.5 crore
and in multiples of Rs. 5 crore thereafter.
8. Eligible Securities
Reverse Repos and Repos will be undertaken in all SLR-eligible
transferable Government of India dated Securities/Treasury Bills.
9. Margin Requirement
A margin will be uniformly applied in respect of the above
eligible securities. The amount of securities offered or tendered on acceptance
of a bid for Rs.100 will be Rs.105 in terms of face value.
10. Settlement of Transactions
The settlement will be done on a gross basis for the LAF and
the SLAF separately and will not be netted.