The Reserve Bank on Friday said Rs 14,030 crore are available under the special lending window set up by the central bank to deal with the redemption pressures of mutual funds.
On 14th October, the RBI had decided to conduct a special 14-day repo auction at 9 per cent per annum for Rs 20,000 crore, with a view to enable banks to meet the liquidity requirement of mutual funds.
Despite offering funds at a reasonable rate to lenders, only a few banks participated in the window, owing to their limited headroom on the first day.
Following the poor response from banks, the RBI decided to keep the facility open till banks cumulatively avail Rs 20,000 crore.
Welcoming the decision on the special window, Finance Minister P Chidambaram had said, "Government has been informed by the mutual fund industry that against their borrowings from the banks they will give as security mainly certificates of deposits of the bank themselves."
Mutual fund industry had sought a facility for accessing funds and "consequently, the government requested SEBI and RBI to meet on Friday and address the issue," he had said.
The settlement for the special repo would be conducted separately and on gross basis, RBI had said.
The RBI further said that this facility would be in addition to repo/reverse repo auctions conducted under Liquidity Adjustment Facility and Second Liquidity Adjustment Facility.
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