The Hindu Business Line : Technical snag in RTGS hits inter-bank payments

Mumbai, Jan. 18 Inter-bank fund transfer temporarily ground to a halt as the centralised software (RTGS) which handles inter-bank payments in real time developed a technical hitch.

Consequently, the RBI announced a special ‘Liquidity Adjustment Facility’ Auction to enable banks to tide over a cash crunch.

Panic gripped market participants particularly since it was reporting Friday and banks began to head to the inter-bank call market to fulfil their cash requirements. Call rates touched a high of 61 per cent during the day.

“We announced the auction after the call rates started going up. There was a technical problem with the RTGS system and we scheduled the auction at around 4.30 p.m. before the banks closed for the day,” said Ms Alpana Killawala, CGM, RBI.

She said that minor glitches with the RTGS system were common but banks were queuing up and the load was much more because of reporting Friday.

All transactions above Rs 1 lakh take place through the RTGS system. The system handles inter bank transactions as well as corporate payments.

“It was a very strange situation because we were initiating the payment while the recipient bank was not able to receive it,” said the treasury head at a public sector bank.

Call rates rise

After the announcement of the auction call rates settled to close at a more comfortable 7.75-8 per cent, against Thursday’s close at 6-6.05 per cent.

Under the Special liquidity adjustment facility auction, there were 15 bids and banks borrowed Rs 5,400 crore through the repo window. There was one bid for Rs 15 crore under the reverse-repo window.

In the CBLO market, there were 615 bids for 37,578 crore and the rates ranged from 5.75 per cent to 59 per cent.

Market participants said that there was panic, which pushed up call rates to 61 per cent during the day.

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