1. Home
  2. India
  3. RBI Takes 3G Call; Allows Banks

RBI Takes 3G Call; Allows Banks To Borrow More From It

The Reserve Bank on Wednesday announced measures to augment money supply in view of pressure in the system due to an expected Rs one lakh crore outgo on account of 3G spectrum and advance tax
PTI May 26, 2010 22:38 IST
PTI

The Reserve Bank on Wednesday announced measures to augment money supply in view of pressure in the system due to an expected Rs one lakh crore outgo on account of 3G spectrum and advance tax payment by corporates.

The Reserve Bank in its statement here announced to commence second liquidity adjustment facility (LAF), through which it manages daily money supply in the system, so that banks can borrow more from RBI.

Currently, the central bank gives only one such facility to banks between 9.30 am and 10.30 am.

The second such facility would be conducted between 4 pm and 4.30 pm and banks can borrow funds from it to the extent of 0.5 per cent of their total deposits, the RBI said.

The Reserve Bank had extended a similar facility when money supply came under intense pressure due to the deepening of global financial crisis in 2008.

These additional measures will be effective from May 28 to July 2 this year, the RBI said adding these measures are adhoc in nature. PTI