What changed
The facility for temporary liquidity support for financing agricultural operations, initially set to expire earlier, has been extended up to December 5, 2008. The interest rate on this support has been revised to the prevailing fixed repo rate under the Liquidity Adjustment Facility (LAF), replacing any previous rate.
What it means for you
Banks can continue accessing short-term liquidity from RBI for agricultural lending at a rate tied to the repo rate, which may lower their funding costs if the repo rate is favorable. This extension supports timely credit flow to the agriculture sector during the current season, helping banks meet priority sector targets without immediate liquidity strain.
What you must do
- Update internal systems to apply the prevailing fixed repo rate under LAF for this liquidity support.
- Communicate the revised interest rate and extended deadline (December 5, 2008) to relevant treasury and agricultural lending teams.
- Ensure all other conditions from the October 15, 2008 circular are still being followed.
- Monitor the repo rate movements to accurately calculate interest on availed support.
Who it affects
All scheduled banks, NABARD, Agricultural lending departments, Treasury departments
What is the new interest rate for this liquidity support?
The interest rate is now the prevailing fixed repo rate under the Liquidity Adjustment Facility (LAF), as revised by RBI.
Until when is this facility available?
The temporary liquidity support is available up to December 5, 2008.
Are any other terms changed besides the rate and deadline?
No, all other conditions from the earlier circular dated October 15, 2008 remain unchanged.