A recent press report states that the interbank call rate plummeted down in spite of being the second day of the new Reporting Fortnight from the start. This is because the banks have fulfilled their needs for reserve by means of borrowing from the Reserve Bank of India’s repo auction.
The dealers said that the one-day call rate ended at 8.20 – 8.30 per cent which was lower compared to 8.35 – 8.40 per cent at close for the two-day loans. The banks have borrowed Rs.72,135 crore from the repo auction of Reserve Bank of India compared to the previous borrowings of Rs.27,590 crore.
They said that due to the higher rates in the call money market, the banks preferred to borrow a huge amount of funds from the repo auction of Reserve Bank of India. The call rates in the call money market usually trades at the rates of 10 – 15 basis points higher than that of the Reserve Bank of India in the opening days of the new Reporting Fortnight. This is because most of the banks would cover their reserve needs in the first week of the new fortnight.