RBI/2008-09/169
Ref. DBOD.No.Ret.BC.43/ 12.02.001/2008-09
September 16, 2008
All
Scheduled Commercial Banks
Dear Sir,
Section
24 of the Banking Regulation Act, 1949 –
Shortfall in Maintenance of Statutory
Liquidity Ratio (SLR) –
Additional Liquidity support under Liquidity Adjustment
Facility (LAF)
At present, banks obtain liquidity from
the Reserve Bank under the liquidity adjustment facility (LAF) against the collateral
of eligible securities that are in excess of their prescribed statutory liquidity
ratio (SLR). It has been decided that, in addition, purely as a temporary measure,
scheduled banks may avail additional liquidity support under the LAF to the extent
of up to one per cent of their net demand and time liabilities.
It
is advised that for any shortfall in maintenance of SLR arising out of availment
of this additional liquidity support under LAF, bank may apply to the Reserve
Bank in writing under sub-section (8) of Section 24 of the Banking Regulation
Act, 1949 with a request not to demand payment of the penal interest thereon.
The
additional liquidity support will be available with effect from the LAF/SLAF auctions
of September 17, 2008. In this context, a reference may also be made to paragraph
4 of circular FMD.MAOG.No.25/01.01.01/2008-09
dated September 16, 2008.
This measure is ad
hoc, temporary in nature and will be reviewed on a continuous basis in the light
of the evolving liquidity conditions.
Yours faithfully
(Vinay
Baijal)
Chief General Manager