NEWS & ADVICE : FIXED DEPOSITS
Short term borrowing to become more expensive for banks
By Neelima Shankar
Dec 7, 2009
Print    Email    RSS   

The cost of short term borrowing will become more expensive for banks in December due to concerns of liquidity tightening by RBI since banks seek to reduce the asset-liability mismatches ahead of the quarter end.

The CD (certificate of deposits) rates witnessed a surge after the data last week showed better than expected GDP results and as top policy makers and advisors warned against inflation.

"I expect CD rates to go up 10-15 basis points more in December, banks would raise more CDs to improve their quarterly balance sheet," said SK Chakraborty, treasurer at Allahabad Bank.

The unexpected GDP figures have triggered worries that RBI that has already started withdrawing the accommodative monetary policy, may soon suck out surplus liquidity that would lead to inflation.

Despite a slow growth in credit, bankers say their demand for short-term funds will continue as huge amounts of deposits accepted last year are due for redemption.

A few banks are planning to refinance short-term borrowings completed last year at around 7-8% with lower cost CDs now.

C Rangarajan, chairman of the PM'c Economic Advisory Committee said that High inflation would entail monetary action on liquidity and food prices must be controlled through supply side measures.

 


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Investment options to Save Tax under...
Gold ETFs or Gold Funds: Which One Should...
Planning to invest in a bank FD? Think again
The recent interest rate hike
Sweep in to Auto Sweep savings A/c


MEXING: CaℒL Giℛℒ In Hoshiarpur 09855660911...
Sakeela.CaℒL Giℛℒs In Kharar 0985566O911...
NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive