Sept 11 auction received Rs1000 cr bids against Rs50,000 cr offered
MUMBAI: The auction conducted by Reserve Bank of India (RBI) for its 56-day term repo for Rs50,000 crore failed to receive a single bid on Monday (September 14) underscoring the fact once again that the banks don’t need funds as they are flush with money.
The recently concluded auction three days ago, on September 11, also met with almost the same fate though received bids worth Rs1000 crore against Rs50,000 crore offered through auction.
The banks that have finished a six-month-long moratorium last month may not be in a lending mood but busy chalking out strategies to drive in payments from the borrowers, who enjoyed a 6-month-long payment holiday.
RBI uses repo operations to inject liquidity into the banking system. The cut-off yield for the September 11 auction was 4 per cent, which is equal to the current policy repo rate.
Banks are said to have parked in excess of Rs 6.40 trillion with RBI last Thursday through the reverse repo window. According to market sources, corporates with good standing get to raise funds with much longer terms at rates below repo through commercial paper (CPs).
