RBI/2010-11/387
Ref. DBOD.No.Ret.BC. 76 /12.02.001/2010-11

January 25, 2011

All Scheduled Commercial Banks

Dear Sir,

Section 24 of Banking Regulation Act, 1949 - Shortfall in Maintenance of Statutory Liquidity Ratio (SLR) – Additional Liquidity Support under Liquidity Adjustment Facility (LAF)

Please refer to our circular DBOD. No. Ret. BC.68/12.02.001/2010-11 dated December 16, 2010 wherein it was advised that Scheduled Commercial Banks may avail of the additional liquidity support under the Liquidity Adjustment Facility (LAF) to the extent of up to 1.0 per cent of their Net Demand and Time Liabilities (NDTL) from December 18, 2010 to January 28, 2011.  For any shortfall in SLR maintenance up to January 28, 2011 arising out of availment of this facility, banks may seek waiver of penal interest on a fortnightly basis purely as an ad hoc, temporary measure.

2.  As set out in the Third Quarter Review of Monetary Policy 2010-11 announced on January 25, 2011, the additional liquidity support to Scheduled Commercial Banks under the LAF to the extent of one per cent of their NDTL, currently set to expire on January 28, 2011, is now extended up to April 8, 2011. For any shortfall in maintenance of the SLR arising out of availment of this facility, banks may seek waiver of penal interest purely as an ad hoc, temporary measure. The liquidity support availed under this facility would, however, need to be reported on a daily basis.

Yours faithfully,

(P R Ravi Mohan)
Chief General Manager