Bank of Baroda, the biggest in the country, has been struggling to meet its cash crunch due to falling exchange rates and a sharp fall in the price of gold, a major supplier of cash.
“We have been facing a cash crunch for some time now and we need to find some other way to sustain operations,” a senior official said.
The central bank on Tuesday cut the central bank’s foreign exchange reserves by over Rs 1 lakh crore.
It has also cut short the interest rate it pays on deposits by 10 basis points from 12 per cent to 7 per cent.
The rupee is down 6 per cent against the dollar on Wednesday, after the RBI cut its benchmark interest rate for the first time since November last year.
The RBI cut the rate by 10 per cent on Friday, and the central banks cut the deposit rate by 20 basis points.
In the past two weeks, the rupee has fallen 12.8 per cent, the most since December 2015.