MUMBAI (Reuters) – The Reserve Bank of India on Thursday allowed banks to set their own limits on interbank money market borrowing to better manage liquidity, although at least four traders said there would be no change Lenders may not be willing or able to participate.
“To provide greater flexibility”, the RBI decided that banks may set their own limits for borrowing and borrowing in the informed and informed money market within the prudential limits prescribed for interbank liabilities, the central bank said on the same day said earlier when announcing its monetary policy.
Banks are currently able to borrow all capital on a daily average basis over the reported two-week period and may borrow 125% of capital on any given day.
“Small banks can borrow more money through this window, but ultimately lenders should be willing and they should have interbank lending limits to provide more money, so we think there probably won’t be Any major changes to liquidity operations after the move, that probably won’t be a game changer,” said a senior Treasury official, who declined to be named as he was not authorized to speak to the media.
The call rate has jumped above the RBI’s marginal standing lending rate in the first half of May due to a skewed liquidity distribution, with the weighted average call rate still above 6. 75%.
“The prevalence of excess liquidity amid increased recourse to marginal standing facilities (MSF) at some banks suggests The distribution of liquidity in the banking system is uneven,” RBI Governor Shaktikanta Das said.
He also said that the central bank’s intention is to keep the lending rate close to the repurchase rate, which is 6.50%.
The weighted average interbank offered rate jumped to 6.50% on Thursday, an increase of more than 17 Basis points since the central bank withdrew more than 1.5 trillion rupees ($) last week. billion) via reverse repurchase.
($1=125.125 INR)
