RBI makes additional amount available to primary dealers under liquidity facility

The Reserve Bank of India will make an additional amount of funds available to standalone primary dealers under the Standing Liquidity Facility starting Thursday, a step that comes at a time when liquidity in the banking system is at a large deficit.

“Based on an assessment of the prevailing and evolving liquidity conditions, the Reserve Bank of India has decided that an additional aggregate amount of ?5,000 crore will be made available to the Standalone Primary Dealers under the Standing Liquidity Facility at the prevailing repo rate starting from January 31, 2024,” the RBI said on Tuesday.

At present, the repo rate – the rate at which the RBI lends funds to banks – is at 6.50%.


The RBI said that the incremental limit for individual standalone primary dealers will be conveyed to them separately. The Standing Liquidity Facility is a collateralised liquidity facility provided by the RBI to standalone primary dealers.

Primary dealers (PDs) are entities which function as market-makers in the government securities market, meaning that these players are mandated to buy and sell securities to ensure market depth. PDs are of two types – those that are part of a bank and those that are standalone.

As on January 29, the liquidity deficit – measured by the quantum banks borrowed from the RBI – was at Rs 2.7 trillion, central bank data showed.