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Call rates slip to MFS rate after RBI’s mid-quarter policy review

18 Dec 2013 Evaluate

Interbank call rates were trading higher at 8.95%/9.00% in early deals against its previous close of 8.70/8.75% as banks borrowed more in anticipation of 25 basis points rate hike from RBI in its mid-quarter policy review. However, the rates aligned with MSF rates as the Reserve Bank of India (RBI) in a positive surprise, left the policy repo rate and reverse repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75% and 6.75% respectively. Further, the cash reserve ratio (CRR) of scheduled banks remains unchanged at 4.0% of net demand and time liability (NDTL). Meanwhile, Marginal Standing Facility and Bank rates continues to remain at 8.75%.

The banks via special Liquidity Adjustment Facility (LAF) borrowed Rs 38220  crore through repo window on December 18, 2013, while banks using LAF borrowed Rs 37422 crore through repo window and parked Rs 1105 crore via reverse repo window on December 17, 2013.

The overnight borrowing rates touched a high and low of 9.00% and 8.70% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 8.84% on Wednesday and total volume stood at Rs 18622.81 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 8.87% on Wednesday and total volume stood at Rs 45539.35 crore, so far.

The indicative call rates which closed at 8.70/8.75% 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.

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