Key Points
Banks have conveyed their concerns about persistently high overnight rates and liquidity conditions to the Reserve Bank of India (RBI) to ensure a more equitable access to funding and shrink the widening gap between the benchmark policy and overnight rates...
Lenders and other participants in money markets had held discussions that highlighted the changing nature of liquidity distribution in the banking system wherein some entities could access funds only at elevated rates...
Market sources said the RBI has been requested by self-regulated market institutions to step in to bring overnight rates closer to the benchmark policy repo rate..
For around a month now, the weighted average call rate (WACR) has been around 25 basis points higher than the benchmark policy repo rate, which is currently at 6.50%..
At the current juncture, the RBI perhaps wants banks to manage their cash flows in a more nimble fashion, but the fact that overnight rates have been high for a month now is a concern and that has been expressed," another source said...
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