Rates of short-term papers fell by 25 basis points today on expectations that Reserve Bank of India will cut key interest rates by this month-end, dealers said.
“Banks are expecting a rate cut and so were issuing papers at lower rates. Most of the banks have surplus cash with them and so they are not in any hurry to raise funds,” said a dealer with a state-owned bank.
Most market participants expect at least 50-basis-point cut in Reverse Repo and Repo rates.Today, banks placed CDs worth Rs 1,025 crore, against Rs 1,190 crore on Monday.
Three-month CDs were quoted at 5.50-5.80 per cent, compared with 5.80-6.10 per cent on Monday. Three-month CPs were also quoted at 9.20-9.40 per cent, against 9.50-10.00 per cent. On Monday, National Housing Bank placed September maturity commercial papers at 6.40 per cent.
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