Liquidity deficit crosses Rs 1 lakh crore

Liquidity deficit in the system crossed Rs 1 lakh crore on the first day of the reporting fortnight with banks rushing to cover product needs. Last week, the deficit had fallen below Rs 1 lakh crore. Today, banks borrowed more than Rs 1.13 lakh crore from the repo window of the Reserve Bank of India.

“This is the first week and banks have just started to build up reserves. So call rates would be moving in the 6.90-7.10 per cent band,” said a dealer with a state-owned bank.

Liquidity deficit in the system has been above the central bank’s comfort zone of Rs 50,000 crore since November, 2010.

Recently, State Bank of India Chairman O P Bhatt had said that although the bank continues to borrow funds from RBI’s repo tender, it is dipping into its SLR holdings.

The central bank has extended liquidity easing measures, namely the second reverse repo and repo auctions, and one per cent leeway on maintaining statutory liquidity ratio until April 8.