RBI/2005-06/221
FMD.No. 2 /01.01.01/2005-06
November 25 , 2005
All Scheduled Commercial Banks (excluding RRBs) and Primary
Dealers
Dear Sir,
SECOND Liquidity Adjustment Facility
At present, Reserve Bank of India operates a
Liquidity Adjustment Facility (LAF) to inject/absorb liquidity through daily
repos/reverse repos auctions. These operations are conducted in the forenoon
between 9.30 A.M. and 10.30 A.M. To fine-tune the management of liquidity and
in response to requests from market participants, it has been decided to introduce
a second LAF (SLAF) from November 28, 2005. SLAF will be conducted between 3.00
P.M. and 3.45 P.M.
2. SLAF is expected to be in the nature of a
residual facility for fine-tuning the management of liquidity in the system.
The salient features of the SLAF are same as those of LAF. The settlement for
LAF and SLAF will, however, be conducted separately and on a gross basis. Details
of the scheme (Annex
A) along with common tender forms for LAF/SLAF (Annex
I & II)
are enclosed.
3. SLAF will be subject to review and modifications,
as needed, based on experience.