29 August, 2017
Government Banking – Issue of Letters of Credit and Bank Guarantee
The Reserve Bank of India (“RBI”), has issued noti cation dated August 03, 2017, pursuant to which it has decided that it will continue not to issue letter of credits (“LC”) on behalf of government and will not act as an issuing or advising bank for government as far as transactions related to bank guarantees (“BG”) are concerned. The role of RBI shall be strictly limited to reimbursement of payments made by the banks for such LCs/BGs on behalf of the government, after satisfying itself with the debit mandate given by the government.
Change in Bank Rate and Marginal Standing Facility Rate
The Bank Rate has been adjusted by 25 basis points from 6.50 per cent to 6.25 per cent with effect from August 02, 2017.
All penal interest rates on shortfall in reserve requirements, which are speci cally linked to the Bank Rate, also stand revised as follow:
Item
Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls)
Revised Rate (Effective from August 02, 2017)
Bank Rate plus 3.0 percentage points (9.25 per cent) or Bank Rate plus 5.0 percentage points (11.25 per cent).
Further, the Marginal Standing Facility (MSF) rate has been adjusted at 6.25 per cent with effect from August 02, 2017.
Liquidity Adjustment Facility (“LAF”) – Repo and Reverse Repo Rates
The Repo rate under the LAF has been revised by 25 basis points from 6.25 per cent to 6.00 per cent. Further, the Reverse Repo rate under the LAF now stands adjusted at 5.75 per cent.
Master Circular – Detection and Impounding of Counterfeit Notes
The RBI has issued noti cation dated July 20, 2017, pursuant to which it has issued new Master Circular on Detection and Impounding of Counterfeit Notes.
For further information, please contact:
Vineet Aneja, Partner, Clasis Law
vineet.aneja@clasislaw.com
