The Reserve Bank of India (RBI) has issued the Master Direction – Reserve Bank of India (Repurchase Transactions (Repo)) Directions, 2025 on November 11, 2025, under Sections 45W and 45U of the Reserve Bank of India Act, 1934. These Directions, effective immediately, consolidate and update the earlier Repo (Reserve Bank) Directions, 2018, primarily to include Municipal Debt Securities as eligible collateral for repo and reverse repo transactions. This inclusion follows a Central Government notification dated October 22, 2025, which classified municipal debt securities as eligible securities for repo purposes.
The Directions govern all repo transactions undertaken in India on recognised stock exchanges, approved electronic trading platforms (ETPs), and in the over-the-counter (OTC) market. However, repos under the Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) remain excluded, being regulated separately.
The Directions define key terms such as corporate bonds, commercial papers (CPs), certificates of deposit (CDs), municipal debt securities, debt ETFs, tri-party repos, and haircuts. Eligible securities for repo now include (a) government securities, (b) listed corporate bonds and debentures, (c) CPs and CDs, (d) units of debt ETFs, (e) municipal debt securities, and (f) other securities of local authorities as notified by the government.
Entities eligible to participate in repo transactions include any regulated entity, listed corporate, certain unlisted companies holding government-issued special securities, All-India Financial Institutions (AIFIs), and other RBI-approved participants. Repo tenors may range from one day to one year.
Repo transactions may be executed bilaterally, multilaterally, or anonymously through recognised exchanges, ETPs, or OTC markets, with prior RBI approval for trading venues. All repos must be reported within 15 minutes to designated platforms—F-TRAC for corporate repos and CROMS for government securities. Settlements occur on a Delivery versus Payment (DvP) basis, with government securities cleared through CCIL and corporate bonds via approved clearing entities.
Haircuts are prescribed to mitigate risk: a minimum of 2% for listed corporate bonds and municipal securities, and 1.5% for CPs and CDs. Accounting, valuation, and disclosure follow RBI or applicable accounting standards. Standard FIMMDA master agreements govern bilateral repos, while tri-party repos require agreements with authorized tri-party agents.
The Directions replace all previous circulars on repo transactions, reinforcing transparency, efficiency, and wider participation in India’s repo market, while extending market liquidity through the inclusion of municipal debt securities.
