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RBI/2006-07/84
FMD.No.9 /01.01.01/2006-07
July 25, 2006
All Scheduled Commercial Banks (excluding RRBs)
and Primary Dealers
Dear Sir,
Liquidity Adjustment Facility – Repo and Reverse
Repo Rates
Please refer to paragraphs 66 and 67 of the
‘First
Quarter Review of Annual Statement on Monetary Policy for the year 2006-07’
dated July 25, 2006 and our circular FMD.MOAG.No.5/01.01.01/2005-06 dated June
8, 2006.
2. In view of the current macroeconomic and
overall monetary conditions, it has been decided, to increase the fixed
reverse repo rate under the liquidity adjustment facility (LAF) of the Reserve
Bank by 25 basis points with effect from second LAF of July 25, 2006 to 6.00 per
cent from 5.75 per cent.
3. The repo rate will continue
to be linked to the reverse repo rate. The spread between the reverse repo rate
and the repo rate has been retained at 100
basis points, as at present. Accordingly,
the fixed repo rate under LAF will be 7.00 per cent, with effect from second
LAF of July 25, 2006.
4. All other terms and conditions of the current
LAF Scheme will remain unchanged.
Yours faithfully
(Chandan Sinha)
Chief General Manager
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