RBI Sets Up Two-stage Cap On Bank Call Operations

Mumbai, June 28: | Updated: Jun 29 2002, 05:30am hrs
The Reserve Bank of India (RBI) has stipulated prudential limits on the exposure of commercial banks in call market in two stages — with deadlines of fortnights beginning October 5 and December 14, respectively.

“In the first stage, with effect from the fortnight beginning October 5, 2002, lending of scheduled commercial banks (SCBs) in the call/notice money market, on a fortnightly average basis, should not exceed 50 per cent of their owned funds (paid-up capital plus reserves) as at the end of March of the previous financial year; however, banks are allowed to lend a maximum of 100 per cent of their owned funds on any day, during a fortnight,” RBI said in a notification on Friday.

Borrowings by SCBs in the call money market, on a fortnightly average basis, should not exceed 150 per cent of their owned funds or 2 per cent of aggregate deposits as at the end of March of the previous financial year, whichever is higher; however, banks are allowed to borrow a maximum of 250 per cent of their owned funds on any day, during a fortnight.

“In the second stage, with effect from the fortnight beginning December 14, 2002, lending of SCBs, on a fortnightly average basis, should not exceed 25 per cent of their owned funds; however, banks are allowed to lend a maximum of 50 per cent on any day, during a fortnight,” RBI said.