Home › Circulars › RBI/2005-06/221

RBI Introduces Second LAF (SLAF) for Fine-Tuning Liquidity

No longer current — replaced by Standing Deposit Facility (SDF)

Source: Reserve Bank of India · RBI/2005-06/221 · issued FY 2005-06 · ~2 min read

Quick answerRBI launched a Second Liquidity Adjustment Facility (SLAF) from November 28, 2005, operating between 3:00 PM and 3:45 PM, to fine-tune daily liquidity management. Settlement is separate and on a gross basis, with features identical to the existing LAF.

What changed

RBI introduced a Second Liquidity Adjustment Facility (SLAF) effective November 28, 2005, operating in the afternoon from 3:00 PM to 3:45 PM. This is in addition to the existing LAF conducted between 9:30 AM and 10:30 AM. SLAF is a residual facility for fine-tuning liquidity, with settlement conducted separately and on a gross basis.

What it means for you

Banks and primary dealers now have an additional window to manage end-of-day liquidity mismatches, reducing reliance on the overnight call money market. The separate gross settlement ensures no netting with the morning LAF, requiring careful cash flow planning. This enhances RBI's ability to fine-tune systemic liquidity without altering the core LAF structure.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Update your treasury operations to participate in the SLAF auction window from 3:00 PM to 3:45 PM daily.
Ensure separate settlement arrangements for LAF and SLAF transactions, as they are settled on a gross basis.
Train dealing room staff on the common tender forms (Annex I & II) for both LAF and SLAF bids.
Monitor liquidity positions more frequently to leverage the afternoon window for fine-tuning.

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury and dealing room teams, RBI's Monetary Policy Department

❓ Common questions

Regulatory timeline

Stated effective date effective November 28, 2005
Decoded by BankPulse 2026-06-19 19:29 IST
Superseded by — Standing Deposit Facility (SDF)
Status change: superseded 09 Jul 2026, 04:05 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the timing of the Second LAF (SLAF)?

SLAF is conducted between 3:00 PM and 3:45 PM, starting November 28, 2005.

How is SLAF settlement different from the regular LAF?

SLAF settlement is conducted separately and on a gross basis, meaning no netting with the morning LAF transactions.

Are the features of SLAF different from the existing LAF?

No, the salient features of SLAF are the same as those of the existing LAF. It is a residual facility for fine-tuning liquidity.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Superseded by Standing Deposit Facility (SDF)

📜 Read the original circular — full text as issued by RBI

RBI/2005-06/221

 FMD.No. 2 /01.01.01/2005-06 

 November 25 , 2005 

 All Scheduled Commercial Banks (excluding RRBs) and Primary 
 Dealers 

 Dear Sir, 

 SECOND Liquidity Adjustment Facility 

 At present, 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. To fine-tune the management of liquidity and 
 in response to requests from market participants, it has been decided to introduce 
 a second LAF (SLAF) from November 28, 2005. SLAF will be conducted between 3.00 
 P.M. and 3.45 P.M. 

 2. SLAF is expected to be in the nature of a 
 residual facility for fine-tuning the management of liquidity in the system. 
 The salient features of the SLAF are same as those of LAF. The settlement for 
 LAF and SLAF will, however, be conducted separately and on a gross basis. Details 
 of the scheme ( Annex 
 A ) along with common tender forms for LAF/SLAF ( Annex 
 I & II ) 
 are enclosed. 

 3. SLAF will be subject to review and modifications, 
 as needed, based on experience. 

 Yours faithfully 

  (Chandan Sinha)

 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/221 · issued FY 2005-06. The plain-English explanation above is BankPulse’s own independent summary.

🧰 Tools — save, print, templates & related

🛠 Banker’s toolkit — checklists & reply templates →

Related circulars · Financial Markets Regulation

Overnight VRR Auction Result: June 30, 2026 RBI conducts ₹75,000 crore overnight VRR auction on June 30, 2026 VRR Auction June 29, 2026: ₹75,021 Cr Allotted at 5.26%Overnight VRR Auction Result: July 29, 2026 RBI to conduct overnight VRR auction of ₹50,000 crore on July 29, 2026

Browse all departments →

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…

BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2638&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.