To help understand: around 1.18 lakh crore was parked in Variable Rate reverse repo at 4.39%, maturing Thu. Means banks have parked with RBI 1.18 lakh cr. at 4.39%
RBI is not offering another variable rate RR, which means banks have to park only at fixed rate RR = 4%. https://twitter.com/CNBCTV18Live/status/1249332580370894848">https://twitter.com/CNBCTV18L...
RBI is not offering another variable rate RR, which means banks have to park only at fixed rate RR = 4%. https://twitter.com/CNBCTV18Live/status/1249332580370894848">https://twitter.com/CNBCTV18L...
Banks get a lower interest rate on their excess cash of 0.4%.
You would think: Oh man, banks will go and lend anywhere for more returns!
You would be wrong.
You would think: Oh man, banks will go and lend anywhere for more returns!
You would be wrong.
Because banks have parked a whopping 5.76 lakh crores, literally, quite as much as our entire fiscal deficit in size, back with the RBI at 4% in the fixed rate Reverse repo. (This is separate from the 1.18 lakh in variable rate RR)
Banks are simply too scared to lend.
Banks are simply too scared to lend.