News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax | PPE Safety Kit SITRA Approved | PPE Safety Kit
General »
 States object to plan to create defence fund out of divisible central taxes
 5% tax on foreign fund transfers that may go up to 10% for some
 After hike, tax collection of Delhi government falls in August
 I-T Deptt launches functionality for banks to check ITR filing status of entities
 How nudges can improve tax compliance
 What does entertainment tax mean?
 Catching elusive taxpayers still a work in progress
 Government clarifies on proposal to modify income tax returns
 Can buying shares in a rights issue leave you in a tax mess?
 Income tax scrutiny down in AY18; Delhi faced the highest, Bihar the least
 Delhi govt warns strict action against companies defaulting on tax payments

Indian cash rates inched up, RBI measures fall short
November, 11th 2010

Indian cash rates inched up in afternoon trade on Wednesday as demand for funds remained strong in the first week of the reporting fortnight.

Concerns over cash crunch persisted despite the central bank's liquidity support measures announced on Tuesday.

At 1 p.m., the one-day inter-bank cash rate was at 7.20/30 percent, compared with Tuesday's close of 7.10/7.15 percent. It moved in the 7.00-7.30 percent band so far in trade.

The Reserve Bank of India (RBI) on Tuesday reintroduced twin liquidity adjustment facilities and relaxed statutory liqudiity ratio, but unlike the previous time, did not announce any open market purchase (OMO) of bonds.

"These measures will not help in reducing the liquidity deficit. These are only measures to comfort the market. To really bring down cash stress levels, RBI needs to conduct OMO," said a dealer at a private bank.

Banks borrowed 710.2 billion rupees at the central bank's morning repo compared with total 1.18 trillion rupees at the twin auctions on Tuesday.

In its policy review earlier this month, the RBI had said that it was "OK" with a cash deficit or surplus of up to about 500 billion rupees.

"If they want to bring the liquidity deficit to around 500 billion rupees, they need to infuse cash. The current measures won't be enough," said a treasurer at a foreign bank.

Dealers said many banks were doing arbitrage deals by borrowing from the RBI's repo window and lending at higher rate in call.

"Since SLR is skewed, those who have excess SLR are able to do this arbitrage while rest are forced to borrow at over 100 basis point spread over repo rate," said the private bank dealer.

The weighted average rate in the call money market was 7.17 percent and that in the collateralised borrowing and lending obligation (CBLO) market was 6.24 percent.

Volumes in the call market were a heavy 129.10 billion rupees, while in CBLO it was 230.44 billion rupees.

Home | About Us | Terms and Conditions | Contact Us | PPE Kit SITRA Approved | PPE Safety Kit
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting