Temporary SLR Relief via LAF: 0.5% Additional Liquidity
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2009-10/477 · issued 26 May 2010 · ~1 min read
Quick answerRBI allowed banks to borrow up to 0.5% of NDTL as extra LAF liquidity from May 28 to July 2, 2010, temporarily relaxing SLR norms. Banks could seek waiver of penal interest for any SLR shortfall caused by this facility.
What changed
Previously, LAF liquidity was available only against securities exceeding the SLR requirement. This circular temporarily allowed banks to avail additional LAF support up to 0.5% of net demand and time liabilities, even if it caused an SLR shortfall. The facility was effective from May 28, 2010 to July 2, 2010.
What it means for you
Banks got a short-term liquidity cushion without immediately facing penal action for SLR non-compliance. This helped manage temporary cash mismatches, but the relief was limited to a small window and required a formal waiver application. Lenders had to proactively write to RBI to avoid penal interest on the shortfall.
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
Apply in writing under Section 24(8) of the Banking Regulation Act, 1949 to request waiver of penal interest for any SLR shortfall from this additional LAF.
Monitor LAF auctions from May 28 to July 2, 2010 to avail the extra 0.5% liquidity support.
Ensure the additional borrowing does not exceed 0.5% of your bank's net demand and time liabilities.
Prepare for the expiry of this temporary facility after July 2, 2010 and revert to normal SLR compliance.
Who it affects
All scheduled commercial banks, Treasury and ALM desks, Compliance departments
RBI’s words: “extend the aforesaid liquidity support facility up to July 16, 2010”
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1704: DBOD.No.Ret.BC.103/12.02.001/2009-10 — "Section 24 of the Banking Regulation Act, 1949 - Shortfall in maintenance of Statutory Liquidity Ratio (SLR) - Additio”
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/477
Ref. DBOD.No.Ret.BC.103/12.02.001/2009-10
May 26, 2010
All Scheduled Commercial Banks
Dear Sir,
Section 24 of the Banking Regulation Act, 1949 –
Shortfall in Maintenance of Statutory Liquidity Ratio (SLR) –
Additional Liquidity support under Liquidity Adjustment Facility (LAF)
At present, banks obtain liquidity from the Reserve Bank under the liquidity adjustment facility (LAF) against the collateral of eligible securities that are in excess of their prescribed statutory liquidity ratio (SLR). It has been decided that, in addition, purely as a temporary measure, scheduled commercial banks may avail additional liquidity support under the LAF to the extent of up to 0.5 per cent of their net demand and time liabilities. The additional liquidity support will be available with effect from the LAF auctions of May 28, 2010 and up to July 2, 2010.
It is advised that for any shortfall in maintenance of SLR arising out of availment of this additional liquidity support under LAF, bank may apply to the Reserve Bank in writing under sub-section (8) of Section 24 of the Banking Regulation Act, 1949 with a request not to demand payment of the penal interest thereon.
Yours faithfully
(B. Mahapatra)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/477 · issued 26 May 2010. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 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=5697&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.
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