**Policy Summary:**
This Reserve Bank of India (RBI) circular, DOR.RRB.No.2831/01.001/2020-21, dated December 4, 2020, announces the extension of the Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) to eligible Regional Rural Banks (RRBs). This measure aims to provide RRBs with an additional tool for liquidity management.
Scheduled RRBs meeting the following criteria are eligible:
1. Implementation of Core Banking Solution (CBS).
2. A minimum Capital to Risk-weighted Assets Ratio (CRAR) of nine percent.
3. Full compliance with the terms and conditions for availing LAF and MSF, as issued by the Financial Markets Operations Department (FMOD) of the RBI.
The RBI will maintain a "Positive List" of eligible RRBs and a "Negative List" of ineligible RRBs, which will be communicated to the respective banks. The eligibility status of RRBs will be reviewed on an ongoing basis. The effective date for RRBs to avail of LAF and MSF will be communicated separately.
For further information, contact Thomas Mathew, Chief General Manager, Department of Regulation, Central Office, Reserve Bank of India, 12th-13th Floor, Central Office Bhavan, Shaheed Bhagat Singh Marg, Mumbai – 400001. Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 2270 5691, 2260 5692.
Key Entities Referenced
Regional Rural Banks: A type of scheduled commercial bank in India operating at the regional level.
Liquidity Adjustment Facility: A monetary policy tool used by the Reserve Bank of India to manage liquidity in the banking system.
Marginal Standing Facility: A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank of India.
Scheduled RRBs: Regional Rural Banks that are included in the Second Schedule to the Reserve Bank of India Act, 1934.
Core Banking Solution: A banking service provided to a group of networked bank branches, allowing customers to access their bank account and perform transactions from any branch within the network.
CRAR: Capital to Risk (Weighted) Assets Ratio, a measure of a bank's capital adequacy.
Financial Markets Operations Department: A department of the Reserve Bank of India responsible for money market operations.
Mumbai, Maharashtra: City in India where the Central Office of Department of Regulation, Reserve Bank of India is located.
भारतीय �रज़व� ब�क
______________________________ RESERVE BANK OF INDIA_______________________________
www.rbi.org.in
RBI/2020-21/76
DOR.RRB.No.28/31.01.001/2020-21 December 4, 2020
All Regional Rural Banks
Madam/ Sir,
Introduction of Liquidity Adjustment Facility (LAF) and Marginal Standing Facility
(MSF) for Regional Rural Banks (RRBs)
In order to provide an additional avenue for liquidity management to Regional Rural Banks
(RRBs), it has been decided that Liquidity Adjustment Facility (LAF) and Marginal
Standing Facility (MSF) will be extended to Scheduled RRBs meeting the following
criteria:
i. Implemented Core Banking Solution (CBS)
ii. There is a minimum CRAR of nine per cent and
iii. Fully compliant with the terms and conditions for availing LAF and MSF issued
by Financial Markets Operations Department (FMOD), Reserve Bank of India.
2. The names of RRBs which meet the eligibility norms to participate in LAF and MSF
(Positive List) and of those RRBs found ineligible (Negative List) will be intimated to the
banks concerned. The eligibility status of the banks will be reviewed on an ongoing basis.
3. The effective date from which the RRBs will be eligible to avail of LAF and MSF will be
intimated separately.
Yours faithfully,
(Thomas Mathew)
Chief General Manager
िविनयमन िवभाग, क�द्रीय काया�लय, 12वी ंऔर 13वी ंमंिज़ल, क�द्रीय काया�लय भवन, शहीद भगत िसंह माग�, मुंबई 400001
टेलीफोन /Tel No: 22661602, 22601000 फै�/Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
Department of Regulation, Central Office, 12th & 13th Floor, Central Office Bhavan, Shaheed Bhagat Singh Marg, Mumbai –
400001. Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
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