Current · Source: Reserve Bank of India · RBI/2013-2014/152 · issued 23 Jul 2013 · ~2 min read
Quick answerRBI capped each bank's LAF borrowing at 0.50% of its NDTL, effective July 24, 2013, replacing the earlier Rs. 75,000 crore system-wide cap. This move aimed to curb rupee volatility by tightening liquidity.
Each bank's LAF borrowing is limited to 0.50% of its individual NDTL, including combined morning and additional LAF repo on reporting Fridays.
How it plays out — a real example
Rahul, a branch operations officer in Indore, calculates his bank's LAF limit as 0.50% of its current NDTL. He monitors usage daily to ensure compliance with the RBI's new rule, which aims to curb rupee volatility by tightening liquidity. Rahul updates his bank's internal liquidity contingency plans to account for the reduced LAF access and reviews alternative funding sources to cover any shortfall.
What changed
The earlier overall LAF allocation cap of Rs. 75,000 crore was withdrawn. Instead, each bank's LAF borrowing is now limited to 0.50% of its individual NDTL, using the same NDTL as for CRR maintenance. The combined allocation from the morning and additional LAF repo on reporting Fridays also falls under this individual cap.
What it means for you
Banks face a tighter, bank-specific liquidity ceiling, which could strain those with high NDTL but limited access to other funding. This measure is part of a broader RBI strategy to defend the rupee by absorbing excess liquidity. Lenders must recalibrate their liquidity management and may need to rely more on market borrowings or deposits.
What you must do
Calculate your bank's LAF limit as 0.50% of current NDTL (same as CRR NDTL) and monitor usage daily.
Update internal liquidity contingency plans to account for the reduced LAF access.
Ensure compliance from July 24, 2013, and adjust borrowing across morning and additional LAF repo on reporting Fridays.
Review alternative funding sources (e.g., term deposits, market borrowings) to cover any shortfall.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Treasury and ALM desks of banks, Banks with high NDTL and limited liquidity buffers
❓ Common questions
Regulatory timeline
Stated effective dateeffective July 24, 2013
Decoded by BankPulse2026-06-18 13:46 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new LAF cap for my bank?
Your bank's total LAF borrowing (including morning and additional repo on reporting Fridays) is capped at 0.50% of its Net Demand and Time Liabilities (NDTL), using the same NDTL figure as for CRR maintenance.
Does this replace the earlier Rs. 75,000 crore cap?
Yes, the earlier system-wide cap of Rs. 75,000 crore under LAF has been withdrawn and replaced by this individual bank-level cap based on NDTL.
When does this change take effect?
The new LAF cap is effective from July 24, 2013. All other terms and conditions of the LAF scheme remain unchanged.
📜 Read the original circular — full text as issued by RBI
RBI/2013-2014/152
FMD.MOAG. No.82/01.01.001/2013-14
July 23, 2013
All Scheduled Commercial Banks (excluding RRBs)
Dear Sir,
Liquidity Adjustment Facility
As you are aware, Reserve Bank of India announced additional measures today to address exchange market volatility. As part of these measures, it has been decided that the total quantum of funds available to a bank under Liquidity Adjustment Facility (LAF) will be capped at 0.50 percent of the individual bank’s Net Demand and Time Liabilities (NDTL) . The above changes in LAF will come into effect from July 24, 2013. For the purpose of arriving at an individual bank’s limit, the NDTL would be the same as being reckoned for the purpose of maintenance of CRR during a reporting fortnight. Accordingly, the earlier instructions issued vide our circular RBI/2013-14/142/FMD.MOAG.No. 80/01.01.001/2013-14 dated July 16, 2013 regarding cap on overall allocation of funds at Rs. 75,000 crore under LAF stand withdrawn.
2. Presently, an additional LAF repo is conducted on reporting Fridays. Under this arrangement, the cap for the individual bank will apply to the combined allocation of funds in the morning and additional LAF repo.
3. All other terms and conditions of the current LAF scheme will remain unchanged.
4. Please acknowledge receipt.
Yours sincerely,
(G. Mahalingam)
Principal Chief General Manager
Related Press Release/Notification
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-2014/152 · issued 23 Jul 2013. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks (excluding RRBs), Treasury and ALM desks of banks, Banks with high NDTL and limited liquidity buffers), your first concrete step on “LAF Cap Tied to NDTL at 0.50%” is: “Calculate your bank's LAF limit as 0.50% of current NDTL (same as CRR NDTL) and monitor usage daily.” (RBI issued this 23 Jul 2013).
Circular: RBI/2013-2014/152 -- LAF Cap Tied to NDTL at 0.50%
Issued: 23 Jul 2013
Action required: Calculate your bank's LAF limit as 0.50% of current NDTL (same as CRR NDTL) and monitor usage daily.
Action required: Update internal liquidity contingency plans to account for the reduced LAF access.
Action required: Ensure compliance from July 24, 2013, and adjust borrowing across morning and additional LAF repo on reporting Fridays.
Action required: Review alternative funding sources (e.g., term deposits, market borrowings) to cover any shortfall.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
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=8260&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.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.