Call rates edge lower; realigns with new repo rate

The overnight borrowing rates touched a high and low of 7.70% and 7.50% respectively

Interbank call rates were trading lower at 7.60/7.65% against its previous close of 7.60/7.70%, following a cut in the central bank's key lending rate to 7.50% from 7.75%. Call rates are expected to ease further in April once government spending picks up. Further, Reserve Bank of India (RBI) in its Mid-Quarter Monetary Policy Review: March 2013, has exuded its commitment towards actively managing liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy.

Meanwhile, RBI, to support an economy set for its slowest growth in a decade, in a much anticipated move, slashed its repo rate by 25 basis points at 7.50% against 7.75% earlier and left its Cash Reserve Ratio (CRR) unchanged at 4%. Consequently, reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.50% with immediate effect.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 130,840 crore through repo window on March 20, 2013, while banks using special LAF facility borrowed Rs 120,385 crore through repo window and parked Rs 65 crore via reverse repo window on March 19, 2013.

The overnight borrowing rates touched a high and low of 7.70% and 7.50% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.67% on Wednesday and total volume stood at Rs 21,354.87 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.53% on Wednesday and total volume stood at Rs 12,656.60 crore, so far.

The indicative call rates which closed at 7.60/70% on Tuesday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.