Mumbai: The meeting between the Indian Banks’ Association and the Reserve Bank of India officials, ahead of the monetary policy, on Monday, focused on liquidity and the global financial developments which could have an impact on India.
According to a bank chief, who attended the meeting the concern was that the central bank may have to consider some means of infusing liquidity into the system.
In the past week banks have been borrowing an average of about Rs 60,000 daily through RBI’s liquidity adjustment facility.
Overnight lending rates have shot up to as much as 15-16 per cent, which is indicative of the tightness in the surplus funds in the system.
The acute scarcity of funds overseas due to the losses suffered by banks, may also lead to a liquidity crunch for Indian banks, especially those overseas operations. The banks may, therefore, need to support their overseas branches, the bank chief said.
“Overseas branches may need some extra support in the light of the global crisis,” he said.
