Usually banks enter into repo deals with the RBI, but in an inter-bank repo market, banks enter into deals with banks, mutual funds and financial institutions.
A repo is basically undertaken to borrow funds and lend securities or to lend funds and borrow securities to maintain the statutory liquidity ratio (SLR).
While the central bank has rejected all repo bids, volumes in inter-bank repo market has for the last three days doubled from a daily average of around Rs 3,000 crore to around Rs 6,000-6,400 crore. The rates on the one-day repo transactions range between 5 per cent and 6 per cent.
This can either be construed as inter-bank players finding their own ways of daily funds by ignoring the inter-bank call market or RBI
