SDB Club Benchmark Real Estate

Money Market
Special Refinance Facility: Extension
A special refinance facility was introduced on November 1, 2008 under Section 17(3B) of the Reserve Bank of India Act, 1934 to provide funding to scheduled commercial banks (excluding regional rural banks) up to 1.0 per cent of their net demand and time liabilities (NDTL) as on October 24, 2008 at the repo rate. It is proposed:
- to extend this special refinance facility up to March 31, 2010.

Special Term Repo Facility: Extension
The Reserve Bank introduced a special 14-day term repo facility for banks in September 2008 through relaxation in the maintenance of SLR up to 1.5 per cent of their NDTL, to enable them to meet the liquidity requirements of mutual funds (MFs), non-banking financial companies (NBFCs) and housing finance companies (HFCs). The auctions for the special 14-day term repo are conducted on a daily basis. On a review, it is proposed:
- to extend the time for availability of this special term repo facility to banks up to March 31, 2010;
- to conduct these 14-day term repo auctions on a weekly basis.

Export Credit Refinance: Review
With a view to providing flexibility in the liquidity management of banks, the limit of the standing liquidity facility to banks in terms of export credit refinance (ECR) under Section 17(3A) of the RBI Act was raised from 15.0 per cent of the eligible outstanding rupee export credit as on the preceding fortnight to 50.0 per cent in November 2008. It is proposed:
- to review the ECR limit in March 2010.

Money Market Mutual Funds
The liquidity stress recently faced by mutual funds, particularly the money market mutual funds (MMMFs), was caused primarily on account of mobilisation of significant resources from large corporates and banks with redemption facilities on par with current accounts of banks. In this regard, the Securities and Exchange Board of India (SEBI) has taken several measures to mitigate the liquidity risks. In view of the systemic implications of the activities of such funds, it is proposed:
- to identify and address the macro-prudential concerns arising from the current framework in consultation with SEBI.

Interest Rate Futures
The Technical Advisory Committee (TAC) for Money, Foreign Exchange and Government Securities Markets had released the report of the Working Group on Interest Rate Futures (Chairman: Shri V. K. Sharma) in August 2008. The Working Group had recommended, inter alia, the introduction of a physically settled contract based on a 10-year notional coupon bearing government bond. The Reserve Bank has already permitted banks to take trading positions in interest rate futures (IRFs). The RBI-SEBI Standing Technical Committee has completed the preparatory work and an exchange traded IRFs contract on the 10-year notional coupon bearing government bond is expected to be launched shortly.