Banks' repo borrowings hit all-time high of Rs 2.16 lakh crore
Bank borrowings from the repo window hit record high of Rs 2.16 lakh crore on Tuesday, a day before RBI restrictions on overnight loans come into effect.
Mumbai: Bank borrowings from the repo window hit record high of Rs 2.16 lakh crore on Tuesday, a day before RBI restrictions on overnight loans come into effect.
RBI has put in place restrictions on daily borrowings at 1 per cent of system's net demand and time liability. The new borrowing limit, which now stands at Rs 75,000 crore, will come into effect from tomorrow.
Banks borrowed Rs 2,16,350 crore, a life-time high, from the liquidity adjustment facility (LAF) of RBI today compared to Rs 92,360 crore borrowed yesterday.
"Today's higher borrowing from LAF is the impact of yesterday's RBI move. Banks might have thought of borrowing for the entire fortnight today itself," said IDBI Bank treasury head NS Venkatesh.
With the new cap on repo borrowing, individual banks will be allocated funds under the LAF according to the proportion to their bids, subject to the overall ceiling, RBI said in the press release.
However, the central bank said if any bank needs fund, then they can borrow from it's marginal standing facility (MSF) at a higher rate.
RBI also recalibrated MSF with immediate effect at be 300 basis points above the policy repo rate under the liquidity adjustment facility. The new MSF rate stands at 10.25 per cent.