Mumbai: Lukewarm response from banks to the special short-term lending (repo) facility today prompted the Reserve Bank to extend the scheme till Rs20,000 crore is fully subscribed for on-lending to mutual funds.
“The 14 days special facility will now be conducted everyday until further notice up to a cumulative amount Rs20,000 crore for the same purpose,” RBI said in a release.
The facility introduced for a day generated limited response as only bids worth Rs3,500 crore from banks and primary dealers were received by the RBI yesterday.
In view of the poor response, the RBI announced the decision to extend the validity period of the scheme without indicating any time frame.
The special window was introduced with the objective of providing liquidity to the mutual fund industry facing redemption pressure on account of withdrawal from their debt instruments and money market instruments.