Repo overnight borrowing is now nearly Rs. 2 trillion (200,000 cr.), which is 3% of “Net Demand and Time Liabilities” (which at last note was about 64 trillion). The RBI comfort level is 1% of NDTL.
This is the highest Repo figure ever, but then remember that NDTL keeps going up. Repo is what is borrowed by giving g-secs as collateral. If a bank has no such collateral, it can borrow using the MSF, where they pay 9.5% a year (under current rates). No one usually borrows at MSF unless they are desperate. In the last three week or so, even the MSF has been used – upto 10,000 cr. (100 bn) – to do additional overnight borrowing.
Update: Dheeraj Singh points out that the net borrowing is still Rs. 1.64 trillion (lakh cr). with 35,000 cr. (350 bn) deposited back to the RBI in reverse repo. This brings down the fear but these numbers are pretty high right now.
Liquidity is very tight. RBI is likely to announce more OMOs, and with the rupee sinking beyond 51 again, it’s likely they will sell dollars and will need to have OMOs just to counter that impact. Keep watching!