Call Rates Touch 10 Per Cent

MONEY MARKET REPORT

Interest rates in the inter-bank overnight money market went up to touch 10 per cent yesterday. In spite of the State Bank of India (SBI) staying away from the money market on account of the strike called by the officers union, there was no panic in the call money market. According to money market dealers there was no problem with respect to availability of funds. In the securities market too, there were very few deals.

A money market dealer said, around 33 per cent of the money lent in the call money market comes from the SBI. Overnight interest rates ruled in the band of nine per cent to 10.50 per cent. Most of the deals were done at around 9.5 per cent. Primary dealers who generally borrow daily from the call money market for funding their operations said they were also not hamstrung by the absence of SBI. Either way, the calls will not go up beyond 11 per cent because banks and primary dealers can avail of refinance from the RBI at the Bank Rate of 11 per cent.

With SBI forced to abstain from the market and calls shooting up, the activity in the gilts market plummeted. There was hardly any demand for T-bills since the funding of T-bills would have been a problem.