2.
In view of the current macroeconomic and overall monetary and liquidity conditions,
it has been decided to withdraw the ceiling of Rs. 3,000 crore on daily reverse
repo under the LAF with effect from August 6, 2007 (Monday). The Reserve Bank,
however, retains the discretion to re-impose a ceiling as appropriate.
3.
On a review, the Second LAF (SLAF) introduced in November 28, 2005 and conducted
between 3.00-3.45 pm on a daily basis is being withdrawn w.e.f. August 6, 2007.
The Reserve Bank would continue to conduct LAF operations between 9.30 am and
10.30 am as a single LAF window. Until notified, these auctions will be on a fixed
rate basis as hitherto.
4.
However, the Reserve Bank has the flexibility to conduct repo/reverse repo auctions
at a fixed rate or variable rates as circumstances warrant. The Reserve Bank also
retains the option to conduct overnight or longer term repo/reverse repo under
the LAF depending on market conditions and other relevant factors. The Reserve
Bank will continue to use this flexibility including the right to accept or reject
tender(s) under the LAF, wholly or partially, if deemed fit, so as to make efficient
use of the LAF in daily liquidity management.
5.
The other terms and conditions for LAF remain as notified by our earlier circular
FMD.MOAG
No.13 /01.01.01/2006-07 dated March 30, 2007.