REPURCHASE AGREEMENTS (REPO) BACKED BY GOVERNMENT SECURITIES
Salient features are:
The amount invested is flexible and could be mutually agreed between the bank and the client,
Interest is paid on maturity,
Withholding Tax (WHT) will not be applicable on the interest income,
Since you receive Government Treasury Bills or Bonds as collateral for your investment, the credit risk could be assumed as zero.
REVERSE REPURCHASE AGREEMENTS (REV REPOS) BACKED BY GOVERNMENT SECURITIES
A Reverse REPO is an agreement between the Bank and the client, where the Bank lends to the client against Treasury Bills or Bonds for a specified period of time and for a mutually agreed rate of interest. This is the opposite of the REPO investments. It provides you with the ability to borrow short-term funds against Government Securities which you already have invested, generally with a yield advantage in comparison to traditional overdraft facilities etc.
REPURCHASE AGREEMENTS BACKED BY CORPORATE DEBT INSTRUMENTS
This is a product where DFCC invests directly in Corporate Debt Instruments such as Debentures, Commercial Papers, Securitization etc. and borrows funds against the same from a customer for a specified period of time and for a mutually agreed rate of interest.
The respective Corporate Debt instruments will be allocated to the clients’ investment as collateral and will be further guaranteed by DFCC. Corporate Debt backed REPO generally provides you with a yield advantage as compared to traditional FD or government security backed REPO.