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Response to long-term repo encouraging: RBI
Why is it in the news?
- According to RBI, the response to the first long-term repo auction, conducted on 17th February, was highly encouraging.
- The central bank has received total bids of ₹1.94 lakh crore, for the three year repo, compared with the notified amount of Rs. 25,000 crore.
More in the news
- Background:
(1) In the sixth bimonthly monetary policy review earlier this month, RBI had announced that it would conduct term repos of one-year and three-year tenors up to a total amount of Rs. 1 lakh crore at the policy repo rate, which is 5.15%.
- Significance:
(1) It will allow banks to garner funds cheaper than the prevailing market and in turn, help them to reduce interest rate costs.
Source
The Hindu.