The call rate went up marginally, as liquidity remained low in the system following the payment of the fourth installment of advance tax by companies.
The overnight rate opened firmer at 4 per cent and touched a high of 4.10 per cent, before easing to close at 3.25 per cent. The weighted average rate remained virtually unchanged at 3.69 per cent, according to data available on the Clearing Corporation of India’s website.
The situation at the Reserve Bank of India’s (RBI’s) reverse repo window was also better with nine banks parking around Rs 6,500 crore, compared with Rs 4,230 crore on Monday. Markets were closed yesterday on account of Gudi Padwa.
“Companies have paid less than what was expected. So, the situation is not difficult,” said a dealer.
Advance tax payment by the top 100 companies in the Mumbai region is estimated to have gone up by around 3.6 per cent to Rs 11,625 crore in the fourth quarter. The region accounts for nearly 40 per cent of the total direct tax collections. The abolition of the fringe benefit tax in July also resulted in companies getting to adjust the higher payment in this installment.
Dealers, however, said it was unlikely that there would be too much cash floating around in the system, as banks were pushing credit flow to meet their annual targets. Besides, banks are keeping cash with them to meet fortnightly reserve requirements.