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RBI Raises Liquidity Facility Limit for Standalone Primary Dealers to Rs 15,000 Crore.

Banking & Finance | Dated: 01 Apr 2025

In March 2025, the Reserve Bank of India (RBI), based in Mumbai (Maharashtra), announced an increase in the aggregate limit available to Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility at the existing repo rate. The limit will rise from Rs 10,000 crore to Rs 15,000 crore, effective from April 02, 2025. This decision was based on the assessment of prevailing and evolving liquidity conditions.

🎯 Key Highlights:

  • - RBI also clarified that the limit for individual SPDs would be communicated separately, with all other terms and conditions remaining unchanged.
  • - Previously, SPDs were permitted to participate only in all overnight liquidity management operations, except for the Marginal Standing Facility (MSF).
  • - SPDs were also allowed to participate in other operations, such as long-term Variable Rate Repo (VRR) operations and daily VRRs, on a case-by-case basis.

💡 Other Important Facts:

  • (i) A Primary Dealer (PD) refers to an RBI-registered Non-Banking Financial Company (NBFC) authorized to buy and sell Government Securities (G-Secs), as per the 'Guidelines for Primary Dealer in Government Securities Market' dated March 29, 1995.
  • (ii) PDs in India are classified into two categories: Standalone Primary Dealers (SPDs) and Bank PDs. SPDs are entities either incorporated abroad, subsidiaries of Scheduled Commercial Banks (SCBs), or registered under the Companies Act as NBFCs.
  • (iii) The Standing Liquidity Facility is a window that allows SPDs to borrow money from RBI at the repo rate. Variable Rate Repo (VRR) is used to infuse short-term liquidity into the banking system, allowing banks to borrow at a rate lower than the repo rate for up to 14 days.

📚 Test Your Knowledge:

Recently, RBI raised the liquidity facility limit for Standalone Primary Dealers (SPDs) to what amount?

Correct Answer: 15,000 crore

🚀 Quick Recap: