RBI/2008-09/168
FMD.MOAG.
No. 25/01.01.01/2008-09 September 16, 2008 All Scheduled
Commercial Banks (excluding RRBs)
and Primary Dealers Dear Sir, SECOND
LIQUIDITY ADJUSTMENT FACILITY Please refer to the
market measures announced by the Reserve Bank today i.e. September 16, 2008 to
alleviate transient pressures on domestic money and forex markets which are related
largely to external developments. 2.
At present, the 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. In addition,
for fine-tuning the management of bank reserves on the last day of the maintenance
period, a second
LAF (SLAF) on reporting Fridays, was introduced
with effect from August 1, 2008. The SLAF is conducted between 4.00 PM and 4.30
PM. The salient features of SLAF are same as those of LAF. However, the settlement
for the LAF and SLAF is conducted separately and on gross basis.
3. In view of the current liquidity conditions, it has been
decided that the SLAF will be conducted on a daily basis, beginning September
17, 2008, till further notice. 4. The Reserve
Bank would continue to reserve the right to accept or reject any or all of the
tenders received under LAF/SLAF, wholly or partially, without assigning any reason.
5. The other terms and conditions for LAF remain as notified
by our earlier circulars. Yours faithfully,
(Chandan Sinha)
Chief General Manager
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