On Tuesday, the Reserve Bank of India (RBI) made a significant announcement, revealing its decision to allocate an additional Rs 5,000 crore to Standalone Primary Dealers (SPDs) through the Standing Liquidity Facility. This additional fund will be accessible at the prevailing repo rate of 6.50 per cent, with the availability commencing from January 31, as outlined in an official statement by the RBI.
The central bank's decision to release this amount is grounded in a thorough assessment of the current and evolving liquidity conditions. As part of this initiative, individual SPDs will be informed of their incremental limits separately. It is crucial to note that all other terms and conditions governing this facility shall remain unaltered.
In the financial landscape, a primary dealer holds significance as an entity registered with the RBI and duly authorized to engage in the buying and selling of government securities. Standalone Primary Dealers, specifically, are entities falling under two categories: either subsidiaries of banks or companies incorporated under the Companies Act and registered as non-banking financial companies.
This move by the RBI underscores its commitment to addressing liquidity dynamics and ensuring the stability of financial institutions, aligning with its mandate to regulate and foster a secure financial environment. As the central bank continues to navigate the evolving economic landscape, such strategic interventions play a pivotal role in maintaining equilibrium within the financial sector.
(With Agency Inputs)