SBI taps RBI for Rs 13,000 cr
Tight liquidity conditions and spiralling oil prices have forced State Bank of India to borrow Rs 13,000 crore from the Reserve Bank of India.
By TNN |
MUMBAI: Tight liquidity conditions and spiralling oil prices have forced the country���s largest lender State Bank of India (SBI) to borrow Rs 13,000 crore from the Reserve Bank of India (RBI). This is the largest amount raised by a bank through RBI���s repo facility, which lends money to banks against government securities.
On Tuesday, the RBI received a single bid of Rs 13,000 crore under repo. Senior SBI officials confirmed that they had borrowed the amount via repo operations at 7.75%. Bankers feel that this borrowing by SBI from the central bank is aimed at protecting money markets from the fallout of intensive borrowings by oil companies.
Justifying the sudden demand for funds, SBI officials said that the rising crude prices have forced oil companies to draw more money from their SBI accounts to buy oil.
On Tuesday, the RBI received a single bid of Rs 13,000 crore under repo. Senior SBI officials confirmed that they had borrowed the amount via repo operations at 7.75%. Bankers feel that this borrowing by SBI from the central bank is aimed at protecting money markets from the fallout of intensive borrowings by oil companies.
Justifying the sudden demand for funds, SBI officials said that the rising crude prices have forced oil companies to draw more money from their SBI accounts to buy oil.
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Bankers said they are the largest borrowers in the recent times, particularly with oil prices going up and the rupee weakening against the dollar.
Sources added that the demand is also due to SBI���s large loan commitments to several infrastructure and manufacturing companies. They said that the loans sanctioned by SBI���s corporate account group went up by Rs 20,000 crore to Rs 50,000 crore in the last two months, fuelling its appetite for funds.
SBI is the only bank which has the capacity to borrow Rs 13,000 crore under the repo facility. No bank other than SBI has liquid government securities worth Rs 13,000 crore.
SBI officials said that the borrowing was a temporary move. ���Over the next few days, we may not need to borrow this much,��� he added. On Monday too, the central bank had received only one bid worth Rs 5,000 crore for the repo auction. Sources confirmed to ET that this bid too was made by SBI. It may be recalled that SBI raised deposit rates by 25 to 50 basis points on Monday on three to 10-year deposits, while most other banks had said that they are not considering an immediate hike in deposit rates.
Last week saw auction of two dated government securities for an amount Rs 10,000 crore. The full impact of CRR hike too kicked in last Saturday, which absorbed around Rs 9,000 crore. As a result, liquidity conditions have tightened since Monday. After a gap of several weeks, RBI lent Rs 5,000 crore to a single bidder under repo.
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On Tuesday, yields on 10-year benchmark paper- 8.24% maturing in 2018 rose sharply to 8.11% from 8.02% on Monday. Also, yields on one-year paper in the overnight index swaps market rose sharply to 7.66% from previous day���s 7.56% while the yields on the five years paper rose to 7.90% from 7.77%.Download
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