Call rates zoom to 100 per cent
Our Banking Bureau
Mumbai, Jan 23C: All rates zoomed to 100 per cent on Friday with banks rushing to borrow to cover their short-term requirements.The overnight market opened at a high of 65-75 per cent and shot up to 100 per cent in the morning session itself before closing at 75 per cent in a day of high demand for short-term funds amid an extremely tight liquidity position. Market sources attributed the high rate to large borrowings by a southeast Asian Bank. A treasury dealer said a large southeast Asian bank in urgent need of funds might have borrowed at the unrealistic rate of 100 per cent. But for some stray deals at around 100 per cent, most of the business was done in the region of 60-80 per cent, after the call rates opened in the range of 65-75 points. Banks rushed to borrow to cover the CRR requirements which the Reserve Bank of India jacked up by 50 basis points last week. The half a percentage point hike in CRR has sucked out Rs 2,500 crore from the system. The Reserve Bank has also reduced the
general refinance facility by 75 basis points and restricted the refinance facility to primary dealers of goverment securities. The Discount and Finance House of India (DFHI) extended market support of over Rs 2,400 crore while the Securities Trading Corporation of India (STCI) business turnover amounted to Rs 500 crore, official sources confirmed. STCI's weighted average call money reference rate was 68.23 per cent. In volatile business, dealers said the market ended on a squarish note. Senior bankers said there could be another round of PLR hike if the call rates continue to rule high over the next few days.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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