The Reserve Bank of India?s (RBI) move to infuse liquidity into the system by reducing the statutory liquidity ratio (SLR) by 50 basis points?on an ad hoc basis ?can create headroom for Rs 20,000 crore and this will have a positive impact on liquidity and interest rate scenario in the system, feel bankers.

The RBI on Wednesday had announced special measures to mange the liquidity situation arising out of the large outflow of funds from the system for meeting the payment requirements on account of auctioning of the 3G spectrum licences for telcos and the ongoing auctioning of broadband wireless spectrum.

The central bank had allowed scheduled commercial banks to avail additional liquidity support under the liquidity adjustment facility (LAF) to the extent of up to 0.5% of their net demand and time liabilities (NDTL) and in case it results in curtailment of minimum SLR level which banks have to maintain at 25%, they will be allowed waiver of penal interest purely as an ad hoc, temporary measure. The measure is effect from May 28 to July 2, 2010. The RBI will also conduct second LAF on a daily basis up to July 2, 2010.

Punjab National Bank (PNB) CMD KR Kamath said the RBI has given a clear cut signal that there will be no dearth of liquidity whenever there was requirement for the same. ?We still have got surplus liquidity worth Rs 7,000-8,000 crore. Yes, there was some kind of pressure on banks due to the financing of 3G auction and the forthcoming payment schedule of advance tax.?

Things are normalising and inflation numbers are also likely to come down as the government borrowing programmes for the first half are coming to an end on September 30.

?So, there would be no pressure on the interest rates and yields are likely to remain range bound for quite some time now.? he said.

State Bank of India (SBI) CFO SS Ranjan said the bank has excess SLR with RBI. ?Still, the new facility will help us for lending money as the credit off-take is all set to increase now. We are still having surplus liquidity to the tune of Rs 20,000-25,000 crore. So far, we have already funded Rs 10,000-12,000 crore for 3G auction.?

Uco Bank CMD SK Goel said liquidity has drastically evaporated and banks were finding themselves in the liquidity trap.

?So, this facility is set to improve liquidity and thus increase the moral confidence among the banks. We have got a surplus liquidity of Rs 2,000 crore. But, I do believe that there will be pressure on liquidity on banks now and interest rates too,? he said.

Goel expected that the lending rate may go up by 50 basis points in the short term and the same thing was likely to happen to the deposit rates too.

M Narendra, executive director, Bank of India said though it will depend on individual banks whether to avail the liquidity window or not , there would be no cause of anxiety in the system due to this. ?Our bank’s exposure to 3G auction is Rs 2,000 crore. But, we don’t need the facility as of now as we are still having ample liquidity,? he said. Arun Kaul, executive director, Central Bank of India said that parking of funds by banks in the reverse repo window of the RBI had already touched the rock bottom level of Rs 4,000 crore quite recently So, liquidity tightening had already started happening in the system,he said.