$7.3bn IMDs mature tomorrow, FM sees no problem

On the eve of the redemption of India Millennium Deposits (IMDs) of $7.3 billion by NRIs, finance minister P Chidambaram today indicated that there would be no problem in the liquidity situation.

"We have enough liquidity. So there is no problem (when IMDs are redeemed)," he said.

State Bank of India will start repaying depositors about $7.3 billion from tomorrow - the day IMDs mature.

Expected IMD redemptions, along with high credit demand, have put pressure on the liquidity situation as reflected in the sudden spurt in call money rate to 7% - well above RBI's reverse repo rate of 5.25%.

Chidambaram also dispelled fears that there will be pressure on other short-term rates.

On borrowings, Chidambaram said the government will go ahead with its market borrowing schedule for January when the centre is slated to mop up Rs 10,000 crore between January 3-11, 2006.