MUMBAI: India's interbank collateralised borrowing rates jumped as high as 72 percent on Saturday, sharply above the average 10-12 percent on normal days, as banks were forced to borrow funds to make payments towards quarterly corporate advance taxes.
The Reserve bank of India (RBI) in a notification late on Friday said the RBI offices would remain open on Saturday and Sunday to clear receipts towards the quarterly advance taxes.
Banks had assumed the payments would have to be made only on Monday and did not have adequate funding available, forcing them to borrow at high rates in the Collateralised Borrowing and Lending Obligation (CBLO) market on Saturday.
The RBI later on Saturday however, announced a special two-day funding window for banks, helping bring the CBLO rates down.
The CBLO transactions were quoted at 10.30 percent at 0805 GMT, after touching a high of 72 percent and sharply above its previous day's close of 10.26 percent.
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