PSBs rescue pvt peers as states pull out deposits after RBI cut rates

The certificates of deposit (CD) market has sprung to life following the Reserve Bank of India’s (RBI’s) unscheduled monetary policy last Friday, after being almost dormant for nearly a month.

Treasury heads say private banks are floating CDs of nearly Rs 5,000- 8,000 crore a day since the RBI lowered the repo and reverse repo rate last week, with these issuances being bought by public sector banks (PSBs), though at high rates.

While part of the issuance is to capitalise on the RBI’s rate action, CD issuances have become imperative for some private lenders such as IndusInd Bank and RBL Bank, which