What changed
The Second LAF, previously conducted only on reporting Fridays, was made a daily operation starting September 17, 2008. The afternoon auction window (4:00 PM to 4:30 PM) now runs every weekday until further notice. Settlement for LAF and SLAF remains separate and on a gross basis.
What it means for you
Banks get an additional daily liquidity management tool beyond the morning LAF, helping them fine-tune reserve positions more flexibly. This move signals RBI's intent to address transient liquidity tightness stemming from global market spillovers. Lenders should expect more frequent afternoon auctions and plan their intraday cash flows accordingly.
What you must do
- Update treasury operations to participate in daily SLAF auctions from 4:00 PM to 4:30 PM.
- Monitor intraday liquidity positions to decide whether to bid in the afternoon window.
- Ensure settlement systems can handle separate gross settlements for LAF and SLAF on a daily basis.
- Review internal liquidity forecasting models to incorporate the daily SLAF availability.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury and ALM desks of banks, RBI's Monetary Operations Department
What is the timing for the daily SLAF?
The SLAF auction window is from 4:00 PM to 4:30 PM every weekday, starting September 17, 2008.
Does the SLAF replace the regular morning LAF?
No, the morning LAF (9:30 AM to 10:30 AM) continues as before. SLAF is an additional afternoon window for fine-tuning liquidity.
Can RBI reject bids in the SLAF?
Yes, RBI reserves the right to accept or reject any tender, wholly or partially, without assigning any reason.