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Modified liquidity support for banks, PDs from tomorrow

Our Bureau

Mumbai, May 6

THE modified scheme of special fund facility for banks and primary dealers will come into effect from May 8, 2001.

The RBI has split the standing liquidity facilities available to banks and primary dealers into two--normal and back-stop.

Under the modified scheme , the quantum of liquidity support available under collateralised lending facility to banks and the quantum of liquidity support available for primary dealers have been split into the two components.

Accordingly, RBI will extend liquidity support to banks and PDs through automatic invocation of intra-day funds a facility for securities settlement against their undrawn balance available to them under normal facility and back-stop facility.

Intra-day funds for securities settlement against undrawn normal facility will be provided at the bank rate and intra day funds against undrawn back-stop facility, in case the normal facility is fully/partly drawn, will be provided at the variable rate a s applicable to back-stop facility for the day, the release said.