Bulk deposit rates steady despite quarter end target pressure

Bankers say that liquidity is comfortable

Banks are in midst of hectic action to meet the December quarter-end targets. But that has hardly triggered mad rush to raise money which pushes up the interest rates for bulk deposits.

Bankers said while banks are not exactly flush with funds, the liquidity is comfortable.

The rates on bulk deposits - big ticket short term money raised from corporates, institutions and high networth individuals - are ruling steady even in the second half of the current month. The rates for bulk deposits are in range of 8.70-9.30%. They vary based on the tenure of deposit (90 to 365 days) and credit rating of the bank.

Vibha Batra, senior vice president with ICRA said that the liquidity in the system has been comfortable and they have not seen spike in the rates for bulk deposits in December.

The rates move in tandem with call rates and RBI's operative rate for lending to banks. At present the operative rate for Marginal Standing Facility is 8.75%.

The inflow of money from non-resident Indians into FCNR-B deposits and overseas borrowing by banks against tier I capital touched $34 billion in September-December period. This has injected huge rupee resources in the system as dollars were swapped at RBI's special window.

N S Venkatesh, head of treasury, IDBI Bank said that this money has kept liquidity comfortable. Many deposits which were coming up for redemption have either been rolled over at lower rates or have been redeemed.

According to RBI data, the deposits have grown by 17% for 12 months ended December 13, 2013. The credit offtake remains weak showing 15% year-on-year growth.