With the quarter coming to an end, banks are rushing for certificate of deposits to shore up their deposit base to meet their target. According to Thomson Reuters data, banks on Wednesday raised Rs 3,775 crore via CDs as compared to Rs 1,975 crore yesterday. Last week, CD issuances touched Rs 16,515 crore.
Dealers said most of the CD issuances are short term in nature. On Wednesday Central Bank of India raised Rs 500 crore via three-month CDs at 9.05 per cent while State Bank of Bikaner and Jaipur raised Rs 350 crore via one-year CDs.
The present rush for CDs is also attributed to the liquidity tightness in the banking system. A low government spend and slow deposit mobilisation has led the present liquidity crunch and as a result banks’ borrowing from the repo window of the Reserve Bank of India is over Rs 1 lakh crore on average, since the first week of November.
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