What changed
RBI added a second LAF auction on reporting Fridays, conducted in the afternoon (4:00-4:30 PM) instead of the usual morning slot. If the reporting Friday is a Mumbai bank holiday, the SLAF moves to the preceding working day. Settlement for SLAF is separate and on a gross basis, while all other LAF terms remain unchanged.
What it means for you
Banks now get an extra window on reporting Fridays to adjust their reserves more precisely at the end of the maintenance period. This reduces the risk of last-minute liquidity mismatches and helps avoid penalties for reserve shortfalls. The separate gross settlement ensures clarity in accounting for each facility.
What you must do
- Update your treasury operations to participate in the SLAF auction on reporting Fridays between 4:00 PM and 4:30 PM.
- Ensure separate settlement processes for LAF and SLAF transactions on a gross basis.
- Monitor RBI circulars for any future modifications to SLAF terms based on experience.
- Acknowledge receipt of this circular via email as instructed.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Primary Dealers
When does the SLAF become effective?
The SLAF is effective from August 1, 2008, and applies to all reporting Fridays.
What happens if reporting Friday is a bank holiday in Mumbai?
In that case, the SLAF will be conducted on the immediate preceding working day.
How is SLAF settlement different from regular LAF?
SLAF settlement is conducted separately from the regular LAF and on a gross basis, meaning each transaction is settled individually.