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MARKET REPO


 
Repo is a repurchase agreement entered into between eligible counterparties for borrowing and lending of funds on a collateralized basis. A repo involves selling of a security with the agreement to repurchase the same at a future date for a predetermined price. The seller of the security receives funds while the buyer of the security receives collateral for the funds he has lent. The rate at which the security will be repurchased in the second leg of the repo is derived from the rate of interest payable on the funds lent and is known as repo rate.
 
Repo transactions are permitted between counterparties and in instruments permitted by the Reserve Bank of India. At present, repoable securities include Central Government dated securities (G-Secs), Treasury Bills (T-Bills), State Development Loans (SDLs) and Corporate Bonds. Recently, RBI also permitted re-repo of securities acquired under reverse repo subject to certain restrictions. Such an arrangement is permitted only in case of dated G-Secs, T-Bills and SDLs. The entities permitted to undertake repo transactions include Scheduled Commercial Banks, Co-operative Banks, Primary Dealers, Mutual Funds, Insurance Companies and corporate entities.
 
A Reverse repo transaction is the mirror image of a repo. It involves buying of securities and lending of short term surplus in the first leg and selling the security at a predetermined rate in the second leg. A repo transaction for one counterparty becomes a reverse repo transaction for the other counterparty.
 
Repo transactions facilitate banks to invest surplus cash for adjusting CRR positions and also for adjusting SLR positions. Clearcorp Repo Order Matching System (CROMS) is an STP enabled anonymous Order Matching Platform launched by Clearcorp Dealing Systems (India) Ltd for facilitating dealing in Market Repos in all kinds of Government Securities. OTC transactions too, are permitted on this platform. The market on an average witnesses volumes in the range of Rs 25,000 – 35,000 Crs.
 
STCI PD has access to CROMS system. We borrow/lend funds/securities on electronic platform as well as in the reported segment. Clients interested in undertaking repo transactions may contact our Funding Desk on 022 66202213/232.
 
 
 

Latest News

In its Fifth Bi-Monthly
In its Fifth Bi-Monthly Monetary Policy for FY19, the MPC-panel maintained ‘status quo’. Consequently, key policy rates remained unchanged - Repo rate at 6.50%, Reverse repo at 6.25% and MSF at 6.75%.
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Inflation projections for
Inflation projections for 2018-19 were revised downwards as food inflation has remained benign. It is projected at 2.7%-3.2%% in H2 FY19 (3.8%-4.5% previously) and 3.8%-4.2% in H1 FY20.
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Growth for FY19
Growth for FY19 is projected at 7.4% with 7.2%-7.3% in H2 FY19 (7.3%-7.4% previously). Growth in H1 FY20 is projected to stand at 7.5%.
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RBI in its February policy
RBI in its February policy cut the repo rate by 25 bps while also changing the stance to ‘neutral’ from ‘calibrated tightening’. Consequently, key policy rates are pegged as follows - Repo rate at 6.25%, Reverse Repo at 6.00% and Marginal Standing Facility (MSF) at 6.50%
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The inflation projections
The inflation projections have been revised downwards to 2.8% in Q4 FY19 (from 2.7-3.2% earlier), 3.2-3.4% in H1 FY20 (from 3.8-4.2% earlier) and 3.9% in Q3 FY20
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GDP growth for FY20
GDP growth for FY20 has been projected at 7.4% - in the range of 7.2-7.4% in H1 (from 7.5% earlier) and 7.5% in Q3.
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Spurring a positive surprise
Spurring a positive surprise, Jan CPI stood significantly lower than market expectations at 2.05% vis-à-vis the revised Dec-18 estimate of 2.11% (2.19% previously). Lack of inflationary pressures in the services components led core CPI to also moderate, clocking in at 5.38%, a sharp fall from 5.68% in Dec-18.
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Industrial production rose
Industrial production rose by 2.4% in Jan-19 as compared to 0.3% in Feb-18. Cumulatively, IIP for FY19 stood at 4.6%, lower than 3.7% in FY18. Significant sequential uptick was observed across sectors; Mining (3.4%), Electricity (2.1%) and Manufacturing (6.8%)
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Wholesale inflation for Jan-19
Wholesale inflation for Jan-19 came in at 2.76%, lower than 3.80% registered in Dec-18. Broad-based fall in commodity prices amid deflationary pressures from food and fuel items led to this downtick in inflation. Consequently, core WPI inched down to 2.91%, as compared to 4.22% in Dec-18.
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