RBI's liquidity steps help short-term rates to fall
Despite year-end pressure of banks to meet business targets, short-term corporate bulk deposit rates have softened significantly after the Reserve Bank of India (RBI) opened several channels to infuse liquidity in the banking system.
The one-year bulk deposit rates, more than 10 per cent in end-February, have softened by 80-90 basis points, dealers said. "Rates for one-year deposits are quoting in the range of 9.17-9.20 per cent now," said the head of treasury of a public sector bank (PSB).
Dealers indicated banks are mostly issuing certificates of deposit (CDs). "We are going for CDs because it turns out to be cheaper than bulk deposits. Today, we raised Rs 200 crore via two-month CDs for 8.5 per cent. CDs raised have come down by 30-40 bps in one week. Even bulk deposit rates have come down recently. The term repos are helping in liquidity infusion, due to which rates are coming down," said a dealer from another PSB.
On Friday, RBI infused Rs 40,000 crore through a 14-day term repo variable rate auction and will infuse Rs 20,000 crore through a five-day repo auction on March 28. Besides, it infused Rs 5,000 crore by repurchasing government securities.
Banks typically rush for funds during quarter ends to meet their business targets, resulting in interest rates experiencing sharp spikes. As a result, the credit and deposit growth numbers of March-end are made to look artificially high, which eventually comes down when the new financial year starts.
Some bankers said lack of credit demand is also helping to keep deposit rates stable. "Credit growth continues to be sluggish for banks and our bank is not an exception. So, we are not rushing for bulk deposits," said a senior treasury official of a mid-sized PSB. Deposit growth has been higher than loan growth in the current financial year.
According to RBI data, the year-on-year deposit growth till March 7 was 15.6 per cent, as compared to 13.1 per cent a year before, while credit growth was 14.7 per cent as compared to 15.4 per cent earlier.
Business Standard
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Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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The one-year bulk deposit rates, more than 10 per cent in end-February, have softened by 80-90 basis points, dealers said. "Rates for one-year deposits are quoting in the range of 9.17-9.20 per cent now," said the head of treasury of a public sector bank (PSB).
Dealers indicated banks are mostly issuing certificates of deposit (CDs). "We are going for CDs because it turns out to be cheaper than bulk deposits. Today, we raised Rs 200 crore via two-month CDs for 8.5 per cent. CDs raised have come down by 30-40 bps in one week. Even bulk deposit rates have come down recently. The term repos are helping in liquidity infusion, due to which rates are coming down," said a dealer from another PSB.
On Friday, RBI infused Rs 40,000 crore through a 14-day term repo variable rate auction and will infuse Rs 20,000 crore through a five-day repo auction on March 28. Besides, it infused Rs 5,000 crore by repurchasing government securities.
Banks typically rush for funds during quarter ends to meet their business targets, resulting in interest rates experiencing sharp spikes. As a result, the credit and deposit growth numbers of March-end are made to look artificially high, which eventually comes down when the new financial year starts.
Some bankers said lack of credit demand is also helping to keep deposit rates stable. "Credit growth continues to be sluggish for banks and our bank is not an exception. So, we are not rushing for bulk deposits," said a senior treasury official of a mid-sized PSB. Deposit growth has been higher than loan growth in the current financial year.
According to RBI data, the year-on-year deposit growth till March 7 was 15.6 per cent, as compared to 13.1 per cent a year before, while credit growth was 14.7 per cent as compared to 15.4 per cent earlier.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
--
You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group.
To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com.
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