MUMBAI: India’s non-banking financial companies (NBFCs) continue to face funding challenges even as banks park more and more money with the Reserve Bank of India’s (RBI) reverse repo window.
In fact, RBI’s move to lower the reverse repo rate by 115 basis points (bps) since 27 March, nudging banks to lend to “productive sectors", has not been effective so far.
Despite these steep cuts, banks have only increased their participation in the reverse repo window, parking ₹7.21 trillion on 23 April in the fixed rate reverse repo (at an interest of 3.75%), from ₹7.09 trillion on 17 April (3.75%) and ₹4.43 trillion on 27 March at 4%.