The Reserve Bank of India (RBI), which today opened a special window for banks to meet any shortage of funds, lent the entire Rs 11,025 crore sought by the banks at the special repo auction under its liquidity adjustment facility (LAF) window.
Banks borrowed funds at six per cent from RBI in 17 bids for two days. The central bank yesterday said it would conduct two sessions of second LAF, on Friday (October 29) and Monday (November 1).
In addition, the central bank had stepped in to ease the demand for liquidity and said banks might avail of additional liquidity under LAF to the extent of one percentage point of net time and demand liabilities. Banks would not be penalised if their statutory liquidity ratio (SLR) dropped to 24 per cent, it said yesterday.
Banks yesterday borrowed a record Rs 1,17,660 crore from RBI's repo window — the highest in two years. After the central bank announced the second LAF option, banks borrowed Rs 350 crore under the facility yesterday. Banks faced shortage of funds after the Rs 15,500-crore Coal India initial share sale was subscribed more than 15 times. Some mutual funds are also facing shortage of funds, say bankers.
RBI has been injecting funds into the system and banks have been borrowing from the repo window since September 9.
News From: http://www.7StarNews.com
Saturday, October 30, 2010
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