RBI lends Rs 11k cr sought by banks under LAF

Banks raised Rs 11.025 crore from the special two-day repo auction under the liquidity adjustment facility (LAF) conducted by the Reserve Bank of India (RBI) on Saturday. RBI had announced special short-term measures on Friday to ease the persistent tight liquidity situation.

"Liquidity situation is going to be tight for some time now even though a lot of liquidity inflows will happen next week... I expect banks to continue borrowing large amount of funds in the next week from RBI's usual repo window,'' said HSU Kamath, executive director, Canara Bank. He added most banks had a surplus statutory liquidity ratio (SLR) portfolio over the mandatory level of 25% which they would use to borrow from RBI.

Banks have been borrowing heavily from the RBI's repo window,call money markets and through certificate of deposits (CD), which had pushed up rates for all short-term instruments.

Though the amount borrowed on Saturday was much less than the total Rs 1,31, 610 crore raised by banks from RBI on Friday, bankers expect the light liquidity situation to persist next week. RBI had already conducted a special second liquidity adjustment facility (SLAF) on Friday and the second one is scheduled for Monday.