Call rates dip to seven month’s low level

Inter-bank call rates opened near seven month’s low level of 7.50% from its previous close of 8.40/50% on Monday as Reserve Bank of India (RBI) resumed buying government bonds this week, in order to ease liquidity pressure. The call rates had on reporting Friday slipped to seven month’s low, however, the rates are expected to surge going further on the back of bank’s demand for funds in order to fulfill for the mandated requirements by first week of reporting cycle itself.

Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank on May 7,2012, decided to conduct Open Market Operations (OMO) by purchasing the government securities for an aggregate amount of Rs 12,000 crore on May 11, 2012.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 116,060 crore through repo window on May 08, 2012. The banks via LAF borrowed Rs 112,370 crore through repo window on May 7, 2012.

The overnight borrowing rates has touched a high of 8.30% and a low of 7.50%, so far.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 8.18% on Tuesday and total volume stood at Rs 13,962.32 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 8.09% on Tuesday and total volume stood at Rs 16,405.75 crore, so far.

The indicative call rates which closed at 8.40/50% 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 Bank, State Bank of India, Union Bank of India, ING Vysya Bank, BNP Paribas, HDFC Bank, P&S Bank.