Reserve Bank outlines details of Funding for Lending Programme
Under the programme, the Reserve Bank will offer to lend funds to eligible counterparties at the Official Cash Rate (OCR) for a term of three years. The borrowing rate will adjust over the term of the transaction with any changes to the OCR.
Eligible counterparties can borrow up to an amount of 6 percent of their total outstanding loans to businesses and households, made up of an initial allocation of 4 percent and an additional incentive-based allocation of 2 percent based on new lending.
The programme will require approved eligible collateral to be pledged in a similar manner to the Reserve Bank's Open Market Operation (OMO) and Term Lending Facility.
The Reserve Bank will make the FLP available for eligible counterparties to use on a daily basis, for a period of 18 months for banks’ initial allocations and a further six months for banks’ additional incentive-based allocations.
Eligible counterparties will be able to access the FLP between 9:00am - 12:00pm every banking day.
Settlement will occur on the next business day.
The programme starts from 7 December and runs until 6 June 2022 for the initial allocations, and until 6 December 2022 for the additional allocations.
For further information contact:
Senior Manager, Financial Markets
Email: [email protected]