The apex banking regulator RBI has taken a decision to offer another collateralised intra-day liquidity facility such that NEFT can smoothly function round the clock with effect from December 16, 2019. NEFT facilitates transfer of funds from one bank account to another of the same or different banks which are its members.
In its release on liquidity support facility- NEFT 24 X 7, the RBI said, "As announced in the Statement on Developmental and Regulatory Policies dated October 4, 2019. In order to facilitate smooth settlement of NEFT transactions in the accounts of the member banks maintained with the Reserve Bank in a 24x7 environment, it has been decided to provide an additional collateralised intra-day liquidity facility, to be called Liquidity Support (LS)".
The LS facility will operate as per the same terms and conditions as the Intra-Day Liquidity (IDL) facility, added the release.
Features of the facility are:
1. The facility will enable NEFT settlements round the clock from December 16.
2. All of the member banks with eligibility to avail IDL facility will be able to also avail LS facility.
3. Now and then the RBI will decide on the limit in respect of LS facility
4. In case of the LS facility, drawings shall be considered in accordance with the eligibility for IDL limit.
5. Margin requirement for both shall be the same
6. Facilities shall be reviewed on the basis of the experience gathered while operatinisation of the scheme by the RBI.
7. Under the LS scheme, outstanding drawing as at the end of the day shall be converted automatically into borrowing under the Marginal Standing Facility (MSF).