What changed
RBI will now conduct a second LAF repo auction on reporting Fridays between 4:30 PM and 5:00 PM, alongside the existing reverse repo and Marginal Standing Facility. If the reporting Friday is a Mumbai holiday, the auction moves to the preceding working day. All other LAF terms remain unchanged.
What it means for you
Banks get an extra window to borrow overnight funds on reporting Fridays, easing pressure on reserve maintenance. This helps smoother liquidity management at a typically tight period. The move responds to market feedback and aims to reduce volatility in call money rates.
What you must do
- Update your treasury operations to participate in the second LAF repo on reporting Fridays from February 10, 2012.
- Adjust liquidity forecasting to account for the additional 4:30-5:00 PM borrowing window on those Fridays.
- Note the holiday rule: if reporting Friday is a Mumbai bank holiday, the auction shifts to the previous working day.
Who it affects
All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments of banks
When does the second LAF repo start?
It starts from February 10, 2012, and will continue until further notice.
What happens if reporting Friday is a Mumbai holiday?
The second LAF repo will be conducted on the immediate preceding working day instead.
Are any other LAF terms changing?
No, all other terms and conditions of the current LAF scheme remain unchanged.