Banks Borrowed Record Amount through RBI’s Repo Facility
Banks in India borrowed a little over Rs 1.7 lakh crore from the Reseve Bank of India (RBI) through the repo window in a single day.
The cash crunch prevalent in India for some time hit a new high on 22 December 2010 with banks borrowing a little over Rs 1.7 lakh crore from the Reseve Bank of India (RBI) through the repo window. The borrowings on 22 December marked an all-time high borrowing figure from the repo facility of the central bank. Banks borrow from RBI’s repo facility only when there is a severe cash crunch. The rates in the call money market, where banks borrow from and lend to each other on an overnight basis went up to a high of 7.02%. On 22 December itself the RBI bought back government securities worth around Rs 8000 crore, and in the process infused this amount into the banking system.