What changed
The additional liquidity support under LAF, previously set to expire on April 8, 2011, has been extended to May 6, 2011. Banks can continue to avail up to 1% of NDTL as extra liquidity, with SLR shortfalls eligible for penal interest waiver on a temporary basis.
What it means for you
This extension gives banks more time to manage liquidity pressures without incurring penalties for SLR non-compliance. It signals RBI's continued accommodative stance to ease funding constraints, but the temporary nature requires banks to plan for normalization. Daily reporting obligations ensure close monitoring of usage.
What you must do
- Avail additional LAF support up to 1% of NDTL if needed, until May 6, 2011.
- Report daily the liquidity support availed under this facility.
- Seek waiver of penal interest for any SLR shortfall arising from this facility.
- Prepare for expiry of this facility after May 6, 2011, and plan liquidity accordingly.
Who it affects
All Scheduled Commercial Banks
What is the maximum additional liquidity support available under this extension?
Banks can avail up to 1% of their Net Demand and Time Liabilities (NDTL) as additional liquidity support under LAF.
Will banks face penal interest for SLR shortfalls due to this facility?
No, banks may seek waiver of penal interest for SLR shortfalls arising from this facility, as an ad hoc and temporary measure.
Until when is this extended facility valid?
The facility is extended until May 6, 2011, from the earlier expiry date of April 8, 2011.