Banks have been forced by the shrinking liquidity to raise the rates being offered for bulk deposits and raise as much as Rs 52,725 crore from the Reserve Bank of India.
One year bulk deposits offered by NTPC and NMDC attracted rates as much as 7.05% on Monday. A month back, the scenario was such that banks were offering rates in the range of 6.25-6.50% for one year certificate deposits. Bankers feel rates would go up due to hardening of policy rates by RBI and no sign of softening liquidity position in the economy.
Such was the condition that despite nation wide bandh yesterday, most banks made sure that their treasury staff came to office either early on Monday morning or stayed back late night on Sunday to rebalance the treasury portfolio. Monday was the first trading day after the policy rate hike by RBI.
Given the tightness, RBI has extended until July 16 the special liquidity facility which expired on July 2.
"Liquidity will start easing only on account of government spending and that I think will take about a fortnight or so. But even as liquidity improves, the system will not move to surplus mode. There will just be adequate liquidity in the system," pointed out Golaka Nath, chief economist of Clearing Corporation of India.