Scheduled commercial banks can set their own limits for borrowing in call money, says RBI Governor Das

RBI

The Reserve Bank of India (RBI) Governor Shaktikanta Das on June 8 said the scheduled commercial banks can set their own limits for borrowing in call money and notice money markets, within the prescribed prudential limits for inter-bank liabilities.

"With a view to provide better flexibility for managing their liquidity it is being decided that schedule commercial banks, excluding small finance banks, can set their own limits for borrowing in call money and notice money markets, within the prescribed prudential limits for inter-bank liabilities," Das said.

The extant guidelines on the Call, Notice and Term Money Markets prescribe prudential limits for outstanding borrowing in Call and Notice Money Markets for Scheduled Commercial Banks.

The central bank updated the master directions Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021.

The updated version says about the limit that Prudential limits for outstanding borrowing transactions in Call and Notice money markets for schedule commercial banks are now internal board approved limits within the prudential limits for inter-bank liabilities prescribed by Department of Regulation.

Earlier, Prudential limits for outstanding borrowing transactions in the Call and Notice Money Markets were 100 percent of capital funds, on a daily average basis in a reporting fortnight, and 125 percent of capital funds on any given day. For Term Money, it was internal board approved limit within the prudential limits for inter-bank liabilities.

These limits were for schedule commercial banks, including the small finance banks. But, the current measures said it will exclude small finance banks.

Today, overnight weighted average call money rates were trading at 6.5960 percent.

The six-member Monetary Policy Committee of the RBI on June 8 kept the policy repo rate unchanged at 6.5 percent in a unanimous decision.