Economy

RBI extends LAF and MSF to Regional Rural Banks along with calls in money market

Updated : December 04, 2020 12:41 PM IST

RBI will issue instructions on liquidity enhancing measures for RRBs soon.

After banks and NBFCs, the Reserve Bank of India (RBI) has now decided to facilitate a more efficient liquidity management in Regional Rural Banks (RRBs).

Accordingly, the apex bank has decided to extend the Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) to RRBs. It has also decided to permit the RRBs to participate in the Call/Notice money market, both as borrowers and lenders.

RRBs are currently not permitted to access the liquidity windows of the Reserve Bank as well as the call/notice money market. RBI will issue instructions on liquidity enhancing measures for RRBs soon.

The Monetary Policy Committee (MPC) of the Reserve Bank kept the repo rate unchanged at 4 percent and maintained an 'accommodative' stance.

The apex bank has projected FY21 real GDP contraction at 7.5 percent as against an expectation of 9.5 percent contraction earlier. Announcing its bi-monthly monetary policy, RBI Governor Shaktikanta Das said that the economy is expected to witness positive GDP growth in the second half of FY21 (H2FY21).

RBI extends LAF and MSF to Regional Rural Banks along with calls in money market

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