Bank borrowings fall below RBI comfort zone to Rs 52K cr

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26 Aug, 2025 12:21

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Saikat Das
moneycontrol.com

At the onset of the new financial year (2013-14), bank borrowings from the Reserve Bank of India (RBI) dropped sharply on Thursday to about Rs 52,100 crore as against a high of Rs 1.75 lakh crore recorded on March 28, FY13. The new low is also below the central bank's comfort zone for liquidity currently stood at around Rs 68,000 (or 1% of total deposits). 

"Going forward, I see the net borrowing level to be stabilized in the range of Rs 75,000-80,000 crore," N S Venkatesh, executive director (treasury) - IDBI Bank told moneycontrol.com.

"Ahead of reporting Friday (April 5), banks have already covered their CRR product with RBI due to year-end pressure. Hence, banks did not need to borrow further. From next fortnight onwards, we have to see how things are panning out. The LAF level should be marginally above the so-called comfort zone," he said.

Banks borrow or park their excess liquidity through Liquidity Adjustment Facility (LAF). Repo is the rate (7.50 per cent) at which lenders borrow while they lend to RBI through reverse repo window at 6.50 per cent.

Currently cash reserve ratio or CRR stands at 4 per cent. This means, every fortnight banks are mandated to keep 4 per cent of their total deposits or called net demand and time liabilities (NDTL) in banking parlance. On daily basis banks are required to keep minimum of 70% their CRR balance, which they generally cover up towards the end of any fortnight. This time, however, banks have already covered up their positions due to year-ending.

Also read:Bank loans miss FY13 RBI projection; grow 14% yoy

According to Ashutosh Khahjuria, president – treasury, Federal Bank, it is normal that at the beginning of the financial year, the LAF level falls below the 1% of NDTL.

"Government starts spending towards to end of March. They make all their due payments to external parties. Those in turn, come back into the banking system. Thereby, a borrower turns into a lender," he said.

Moreover, the government's tax collections push its credit balance. It prompts the government to start spending.

Any level of bank borrowings just before a RBI fortnight ends is not a true indicator for liquidity position. The original picture is likely to emerge from Monday (April 8), the beginning of a fresh fortnight, said a debt fund manager from a mutual fund house.

Any easing of liquidity position however would bring down chances of RBI's open market operations (OMOs). In addition to CRR cuts, RBI uses OMO route to pump in liquidity into the system. It buys back government bonds through this.

Date	Net bankborrowings (approx) (In crore)
April 04, 2013	52,000
April 03, 2013	67,100
April 02, 2013	1,09,400
March 28, 2013	1,75,000

saikat.das@network18online.com