Banks can draw more money to meet 3G fee requirement

Banks can draw more money to meet 3G fee requirement

At present, the RBI offers only one window— the Liquidity Adjustment Facility (LAF)— to banks between 9.30 am and 10.30 am everyday to lend or borrow from it against government securities. RBI manages daily money supply in the system through LAF. Starting from May 28, the apex bank will allow banks to avail of second such measure for half an hour between 4 pm and 4.30 pm.

The facility will allow banks to borrow more from RBI to the tune of 0.5 per cent of their deposits. In the first LAF, banks can borrow or lend as much as their requirements.
However, RBI sees money supply in the system before accepting or rejecting their demands. The second window may inject up to Rs 25,000 crore—0.5 per cent of the total bank deposits of Rs 50 lakh crore at present. At present, banks are required to have 25 per cent of their deposits in government securities, cash and gold.

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