Rates on short-term money market instruments fell by 10-15 basis points on Thursday after the Reserve Bank of India cut the Statutory Liquidity Ratio in a measure to ease the liquidity tightness in the banking system, dealers said.
The RBI on Thursday, at its mid-quarter policy review, cut the SLR to 24 per cent from 25 per cent with an aim to address the problem of tight liquidity.
RBI also said that it would conduct open market operations to ease the pressure on liquidity. The central bank, however, maintained status quo on repo, reverse repo rates and the Cash Reserve Ratio.
“The rates have already fallen on Thursday after the central bank’s liquidity easing measures. The rates are however expected to remain at these levels this month,” said a dealer with a state-owned bank.
Three-month certificates of deposit were dealt at 8.75-8.95 per cent, compared with 8.90-9.10 per cent Wednesday. Three-month commercial papers quoted 9.30-9.50 per cent, flat from previous levels.
Rates for one-year papers were 9.30-9.50 per cent, compared with 9.40-9.60 per cent Wednesday.
