What changed
The rate of interest on the temporary liquidity support facility for agricultural operations was reduced to the prevailing fixed repo rate under LAF, which is 8% per annum, effective October 20, 2008. All other terms and conditions from the earlier circular remain unchanged.
What it means for you
Banks can now access cheaper liquidity from RBI for financing agricultural operations, as the interest rate is aligned with the repo rate. This reduces the cost of funds for banks, potentially enabling them to offer more competitive rates to farmers. The move supports agricultural credit flow during the season.
What you must do
- Update your internal systems to reflect the new interest rate of 8% per annum on this liquidity facility.
- Communicate the revised rate to your treasury and agricultural lending teams.
- Ensure compliance with all other unchanged conditions from the October 15, 2008 circular.
Who it affects
Scheduled banks, NABARD, Agricultural lending departments, Treasury departments
What is the effective date of this revised interest rate?
The revised rate of 8% per annum is effective from October 20, 2008.
Does this circular change any other terms of the liquidity support?
No, only the interest rate has been revised. All other conditions from the earlier circular dated October 15, 2008 remain unchanged.