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Repo deals in corporate bonds from 1 Mar

Repo deals in corporate bonds from 1 Mar

Mumbai: The Reserve Bank of India (RBI) on Tuesday said repurchase agreements or repos using corporate bonds as collateral would be allowed from 1 March.

RBI, in a notification, said, “Only listed corporate debt securities, which are rated ‘AA’ or above by the rating agencies, in demat form will be eligible for repo provided that commercial papers, certificates of deposit and other instruments including non-convertible debentures of less than one year of original maturity, will not be eligible securities for undertaking repo."

Repos in corporate debt securities will be for a minimum of one day and a maximum of one year. The central bank has permitted insurance companies registered with the Insurance Regulatory and Development Authority, mutual funds registered with the Securities and Exchange Board of India, and housing finance companies registered with the National Housing Bank, to participate in trade.

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