Banks borrow Rs 8,550 cr from repo facility for MFs

MUMBAI: Banks have so far borrowed Rs 8,550 crore from the special short-term lending window opened by the Reserve Bank for on-lending funds to the mutual funds.

As much as Rs 1,545 crore was picked up by the banks at the special fixed rate repo auction at 8 per cent conducted by RBI with a view to enable banks to meet the liquidity requirements of mutual funds.

Reserve Bank had earlier announced that it would conduct the special auction under the liquidity adjustment facility till the cumulative amount of Rs 20,000 crore was utilised by the bank. Banks had utilised Rs 7,005 crore of this facility till October 17.

In addition, RBI has also allowed banks to avail of additional liquidity support facility exclusively for meeting the fund requirements of mutual funds to the extent of 0.5 per cent of their net deposits. The RBI further said because of the strike call given by United Forum of Reserve Bank officers and employees, the next auction would be conducted on October 22.