Takes steps to ease liquidity

According to the RBI’s special measures, banks would be able to avail of more funds under the liquidity adjustment facility (LAF) for up to one per cent more on their deposits.

“Scheduled commercial banks may avail of additional liquidity support under the LAF to the extent of up to 1.0 per cent of their net demand and time liabilities (NDTL) as on the reporting Friday of the second preceding fortnight,” RBI said in a statement. “For any shortfall in maintenance of statutory liquidity ratio (SLR) during November 9–December 16, 2010, arising out of availment of this facility, banks may seek waiver of penal interest purely as an ad hoc, temporary measure,” it said. Besides, special LAF auctions will be conducted during at 4:30 pm every day till December 16, it said.

The above measures are purely ad hoc, temporary and will be in force till December 16, 2010, it added. There has been liquidity crunch in the system due to festival demand and Coal India IPO that sucked liquidity over Rs 15,000 out of the system.