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MARKET REPO


 
Repo is a repurchase agreement entered into between eligible counterparties for borrowing and lending of funds on a collateralized basis. A repo involves selling of a security with the agreement to repurchase the same at a future date for a predetermined price. The seller of the security receives funds while the buyer of the security receives collateral for the funds he has lent. The rate at which the security will be repurchased in the second leg of the repo is derived from the rate of interest payable on the funds lent and is known as repo rate.
 
Repo transactions are permitted between counterparties and in instruments permitted by the Reserve Bank of India. At present, repoable securities include Central Government dated securities (G-Secs), Treasury Bills (T-Bills), State Development Loans (SDLs) and Corporate Bonds. Recently, RBI also permitted re-repo of securities acquired under reverse repo subject to certain restrictions. Such an arrangement is permitted only in case of dated G-Secs, T-Bills and SDLs. The entities permitted to undertake repo transactions include Scheduled Commercial Banks, Co-operative Banks, Primary Dealers, Mutual Funds, Insurance Companies and corporate entities.
 
A Reverse repo transaction is the mirror image of a repo. It involves buying of securities and lending of short term surplus in the first leg and selling the security at a predetermined rate in the second leg. A repo transaction for one counterparty becomes a reverse repo transaction for the other counterparty.
 
Repo transactions facilitate banks to invest surplus cash for adjusting CRR positions and also for adjusting SLR positions. Clearcorp Repo Order Matching System (CROMS) is an STP enabled anonymous Order Matching Platform launched by Clearcorp Dealing Systems (India) Ltd for facilitating dealing in Market Repos in all kinds of Government Securities. OTC transactions too, are permitted on this platform. The market on an average witnesses volumes in the range of Rs 25,000 – 35,000 Crs.
 
STCI PD has access to CROMS system. We borrow/lend funds/securities on electronic platform as well as in the reported segment. Clients interested in undertaking repo transactions may contact our Funding Desk on 022 66202213/232.
 
 
 

Latest News


In its first Bi-Monthly Monetary Policy for FY18, the MPC-panel maintained its pause on policy rates, whilst reiterating its neutral stance.
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The panel forecasts mild upside risks to its inflation projections, while GVA growth is expected to remain healthy at 7.4% for FY18.
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India’s consumer price-based inflation dropped to new record low of 2.99% in April on the back of decline in prices of food articles including pulses and vegetables.
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India’s WPI based on the revised 2011-12 series edged lower to 3.85% in April as manufactured goods and food articles indicated cooling of prices.
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Further fine-tuning the existing liquidity framework, RBI narrowed the LAF corridor to +/- 50 bps vis a vis the earlier +/- 100 bps.
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Consequently, the policy rates are as follows: 1. Repo rate: 6.25%, 2. Reverse repo: 6% , 3. MSF at 6.50%.
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India’s Industrial Production in March under the revised base year of 2011-12 slipped 2.7% as against 5.5% in Feb owing to weak performance in the manufacturing sector.
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