The Reserve Bank of India (RBI) on Friday extended until July 30 a mechanism providing lenders with extra liquidity, in a move aimed at easing strained cash conditions in the banking system.
In a statement after market hours, the RBI said it extended its second liquidity adjustment facility (LAF) after assessing funding conditions.

The central bank lends to banks through its repo window and absorbs excess cash from the system via the reverse repo under the daily LAF system. The second LAF auction, conducted in the afternoon, is in addition to the morning LAF auction.
The RBI launched a second LAF and relaxed minimum statutory liquidity ratios in late May, extending the measures in early July.
The one-year overnight indexed swap (OIS) has risen more than 85 basis points from end-May, following a cash outflow of Rs 1.36 trillion (USD 29 billion) in part due to advance tax payments.
"Even though banks will continue to enjoy an additional repo window which will help keep call money near the repo level, I do not expect the one-year OIS rate to ease just because of that," said Manish Sarraf, treasury head at Dhanalaxmi Bank, adding he expects no impact on the benchmark 10-year bond yield on Monday.
"If banks' repo borrowing comes down, then the one-year OIS may ease to 5.65%," he added.
Tight liquidity has pushed up overnight call money rates towards the central bank's repo rate of 5.5%.
Banks' daily borrowing from the central bank via the repo window averaged above Rs 50000 crore rupees so far in this reporting cycle, showing the extent of the cash deficit in the system.

source: moneycontrol