For the fourth consecutive day, banks parked over Rs 1,00,000 crore with the Reserve Bank of India (RBI) through the reverse repo window, indicating that there was a surplus liquidity in the system.
As a result, the weighted average call rate was 3.52 per cent, as against 3.55 per cent on Saturday, according to data on the Clearing Corporation of India’s website. Rates ranged between 2 per cent and 3.65 per cent On Monday though markets are closed tomorrow.
Additionally, this is the start of the new reporting fortnight and, typically, demand for funds is strong during the first week of the reporting fortnight as banks cover most of their requirements to meet the prescribed level of reserves.
| ONE WAY TRAFFIC Amount parked with RBI via reverse repo | |
| Amount (Rs cr) | |
A large liquidity overhang was visible in the Collateralised Borrowing and Lending Operations (CBLO) segment too with rates moving in the 1.25 per cent to 5 per cent range.
Though rates came under pressure towards the end of the trading session, the weighted average rate was 1.62 per cent, as against 3.42 per cent on Saturday.
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While a part of the reason for the surplus liquidity is the limited demand for loans at the start of the financial year, money has also flowed into the system with bonds maturing.
The high level of liquidity in the system is making bankers believe that the Reserve Bank of India may not reduce the cash reserve ratio in the forthcoming annual policy, which is due on April 21.
Cash reserve ratio is the proportion of deposits that banks have to set aside. Since the credit crisis intensified last year, RBI has lowered the CRR by 400 basis points to 5 per cent.
A high level of liquidity is also being seen as a pre-cursor for banks to lower deposit rates. Bank of Baroda On Monday announced a reduction in deposit rates by 50 basis points.