Call rates remains higher on sustained demand

The overnight borrowing rates touched a high and low of 7.95% and 7.75% respectively

Interbank call rates were trading little higher at 7.90/95% from its previous close of 7.85/95% on Monday, as demand remained high given that banks scrambled to fulfill their fortnightly requirements following the advance tax outflows, which strained banks cash situation. However, liquidity is expected to return to the system in a couple of weeks as the government spends the money collected through taxes.

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 120385 crore through repo window on March 19, 2013, while banks using special LAF facility borrowed Rs 142695 crore through repo window and parked Rs 25 crore via reverse repo window on March 18, 2013.

The overnight borrowing rates touched a high and low of 7.95% and 7.75% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.87% on Tuesday and total volume stood at Rs 22186.74 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.76% on Tuesday and total volume stood at Rs 24748.55 crore, so far.

The indicative call rates which closed at 7.85/95% on Monday 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.