Primary issuances by banks rose On Wednesday as investors expect the Reserve Bank of India (RBI) to cut its key interest rates soon, thus pulling down rates of short-term money market instruments, dealers said.
On Wednesday, banks placed certificates of deposit (CDs) worth Rs 3,400 crore against Rs 2,055 crore on Tuesday.
Dealers said the chances of the central bank cutting rates again strengthened after government’s extra market borrowing plans for the rest of 2008-09 (April-March) were announced on Tuesday.Short-term rates eased 5 basis points On Wednesday due to increased demand by mutual funds. Allahabad Bank’s six-month CDs were dealt at 6.46 per cent On Wednesday compared with 6.50 per cent Tuesday, while State Bank of Hyderabad’s one-year CDs were dealt at 6.97 per cent versus 7.00 per cent.
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