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RBI/2005-06/189
FMD.No.1 /01.01.01/2005-06
October 25, 2005
All Scheduled Commercial Banks (excluding RRBs) and Primary
Dealers
Dear Sir,
Liquidity Adjustment Facility – Repo and Reverse
Repo Rates
Please refer to paragraphs 52 and 53 of the
Mid-Term Review
of Annual Policy Statement for the year 2005-06 dated October 25, 2005 and
our circular IDMD.OMO.No.09/03.75.00/2004-05
dated April 28, 2005.
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 October 26, 2005 to 5.25 per cent from 5.0
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 6.25 per cent, effective October 26, 2005.
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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