The Union Cabinet today gave its approval to move an amendment in the Reserve Bank of India (Amendment) Bill, 2005 (Bill No.76 of 2005) by incorporating the first recommendation of the Standing Committee of Parliament on Finance as follows:
"Modification of the definitions of the expressions 'Repo' and 'Reverse Repo' are to be accepted, as this would bring about conformity with market usage and the common practice followed internationally. It may be mentioned that 'Repo' and 'Reverse Repo' represent two sides of the same transaction between two parties that involve borrowing and lending of funds. In other words, what is 'Repo' from the perspective of one party is 'Reverse Repo' for the other and vice versa. The definitions of 'Repo' and 'Reverse Repo' in the Bill reflected the perspective of RBI in transactions in which RBI itself is a party."
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However it has now been felt that it would be appropriate to change the definitions to reflect the perspective of the market which would be in line with the modification that has been recommended by the Standing Committee.
Source:- PIB Press Releases.