Reserve Bank Of India Faces First Technical Glitch In Four Years, Affecting Lenders

India's central bank system faced a technical glitch on Tuesday, preventing lenders from managing their daily liquidity needs. This failure marks the first since the system's inception nearly four years ago.

The automated sweep-in and sweep-out system (ASISO) helps banks park funds at the Reserve Bank of India's Standing Deposit Facility and borrow from its Marginal Standing Facility. Due to the issue, funds were neither debited nor credited, according to treasury officials.

"There was a technical issue, and the ASISO facility in e-Kuber that gets automatically triggered around midnight did not go through, so funds have not changed hands," a senior treasury official at a large private bank said.

The central bank did not immediately respond to a Reuters' query seeking comment. The treasury officials requested anonymity as they are not authorised to speak to the media.

As of 10:45 a.m. IST on Wednesday, the RBI had not published its daily money market operation statement, which typically includes data on the banking system's liquidity position and is generally released at 9:00 a.m. IST.

Indian banks are required to park 4.5% of their net deposits with the central bank and must maintain at least 90% of this requirement daily. The Marginal Standing Facility allows lenders facing fund shortages to access liquidity from the central bank.

"It is still not clear whether the system is working, but the central bank should not penalise banks that were short of cash maintenance requirement, as the fault has been from the system's side," a trader said.