Reserve Bank of India has decided to extend more liquidity support to banks. The banking regulator will be open second liquid adjustment facility (SLAF) window everyday at 4.15 pm till January 28, 2011 so as to lighten the existing pressure on liquidity.

The central bank has said that all scheduled commercial banks can avail SLAF till 2% of their net demand and time liabilities (NDTL).

Banks can avail waiver on penal interest every fortnight but on temporary basis in order to meet any shortfall in meeting statutory liquidity ratio (SLR) needs till January 28 next year.

The move by the apex bank comes to fill the excess deficit in liquidity as a result of second monetary policy review of RBI earlier this month.

"Even though a liquidity deficit is consistent with anti-inflation stance, excessive deficit in liquidity can be disruptive both, to financial markets and to credit growth in the banking system. To ensure that economic activity is not disrupted by liquidity constraints, the liquidity deficit needs to be contained within a reasonable limit," RBI had stated in the review.