Source : BLBureau:Mumbai, May 26,2010.
In a bid to help tide over the liquidity crunch arising from advance tax payments and 3G auctions, the Reserve Bank of India on Wednesday said banks can avail additional liquidity support under the Liquidity Adjustment Facility (LAF) to the extent of up to 0.5 per cent of their net demand and time liabilities.
For any shortfall in the maintenance of Statutory Liquidity Ratio arising out of availment of the additional liquidity facility, banks could seek waiver of penal interest purely as an ad hoc, temporary measure, the RBI said in a statement.
Further, the second LAF (SLAF) will be conducted on a daily basis up to July 2. It will be conducted between 4.00 p.m. and 4.30 p.m.
The RBI said these measures were ad hoc in nature and the additional liquidity support under this scheme and the daily SLAF would be available with effect from May 28, 2010 and up to July 2, 2010.
Liquidity in the banking system has been under pressure from May 21 onwards, when under the LAF, the three-day reverse repo window saw reduced deployment of Rs 9,325 crore as against Rs 34,915 crore on May 20. Subsequently, the LAF amount fell to Rs 5,685 crore on May 26.
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