India central bank asks banks to ensure sufficient collateral for repo borrowing

MUMBAI: The Reserve Bank of India on Tuesday asked banks to ensure that they have sufficient collateral securities in their accounts before submitting bids to borrow under the repo window.

The central bank had announced late on Monday that it will cap the extent to which banks can borrow money from the RBI at 750 billion rupees, effective Wednesday, as a step to boost rupee demand and stem the currency's decline.

The RBI also said the cap of 750 billion rupees will be applicable to the combined amount in morning and evening repo auctions on reporting Fridays.

If the allotted amount in the morning repo is 750 billion rupees, there will be no evening repo on reporting Fridays, it added.