What changed
RBI announced a special 2-day repo auction under LAF on Saturday, October 30, 2010, at 10:30 AM. Banks could avail additional liquidity support up to 1% of their NDTL as on October 8, 2010. For any SLR shortfall on October 30-31 due to this facility, RBI allowed waiver of penal interest as an ad hoc, temporary measure.
What it means for you
This was a short-term liquidity injection to address frictional pressure, giving banks breathing room without penalty for SLR non-compliance. Banks could use the extra funds for two days without incurring penal charges, but the facility was strictly limited to October 30, 2010.
What you must do
- Participate in the special 2-day repo auction on October 30, 2010, at 10:30 AM if additional liquidity is needed.
- Calculate additional support as up to 1% of NDTL as on October 8, 2010.
- Document any SLR shortfall on October 30-31 arising from this facility for waiver of penal interest.
- Note that this is a one-time, ad hoc measure valid only for October 30, 2010.
Who it affects
All Scheduled Commercial Banks, Treasury and liquidity management teams, Compliance departments handling SLR reporting
What was the maximum amount banks could borrow under this facility?
Banks could avail additional liquidity support up to 1% of their net demand and time liabilities (NDTL) as on October 8, 2010.
Was the penal interest waiver automatic for any SLR shortfall?
No, banks had to seek waiver of penal interest for SLR shortfall on October 30-31 arising from this facility, and it was purely an ad hoc, temporary measure.
Could banks use this facility on any other day?
No, the special repo auction and the associated SLR shortfall waiver were available only on Saturday, October 30, 2010.