PSU banks’ borrowing share in uncollateralised money segment fell to 3% in 2024: RBI

Call Money market

The share of state-owned banks' borrowings in the uncollateralised money segment fell to just 3 percent in 2024, from 32 percent in 2019, as these lenders increased activity in the collateralised segment, according to the Reserve Bank of India’s (RBI) July bulletin.

The bulletin added that private banks also recorded a declining trend during the same period.

The uncollateralised money segment includes call, notice and term money markets. Scheduled commercial banks (including payment banks and small finance banks), regional rural banks, cooperative banks (whether state, district central or urban cooperative banks) and primary dealers can act as borrowers and lenders in these markets.

On the other side, cooperative banks were the major lenders in the uncollateralised money bucket. The transaction volume of cooperative banks has not changed significantly over time, although their share has increased since 2019, the bulletin added.

While the share of cooperative banks in the monthly lending volume was around 66 per cent during the pandemic, it was on average 57 per cent of the overall transacted volume between 2019 and 2024, the RBI said.

The bulletin added that activity in the Indian money market has increased significantly in recent years, with the collateralised segment, led by the tri-party repo, dominating in terms of transaction volume.

The collateralised segment accounted for an average volume share of 96 percent as against 4 percent for the uncollateralised call money market from January 2019 to December 2024, the period under consideration.

While the transacted volume of the call segment nearly halved from 2019 to 2024, its share in the overall money market shrank to 2 per cent in December 2024 from 10 per cent in January 2019. The average daily traded volume in TREP and market repo increased to Rs 3.4 lakh crore and Rs 1.4 lakh crore in 2024 from Rs 1.4 lakh crore and Rs 0.5 lakh crore, respectively, in 2019, bulletin said.

On July 23, Moneycontrol reported that the share of call money in the total volume of the money market had risen over 3 percent in the last few days, which experts attributed to the extension of trading time by the RBI for the overnight market from July 1.