India o/n rates steady on liquidity; volume edges up

MUMBAI, Nov 24 - Indian cash rates were steady on Tuesday on surplus liquidity but volume in the inter-bank segment inched up from Monday's level, as some banks were short of collaterals to borrow at lower rates from the CBLO, traders said.

"System SLR is around 27 percent but the holding of many private and foreign banks is close to the stipulated level, I think," said Phani, a trader at State Bank of Hyderabad, who uses only his first name.

"So they are preferring the call window."

Statutory Liquidity Ratio, or SLR, is the portion of banks' deposits to be invested in government securities. It is currently at 25 percent.

As the central bank absorbs excess cash from banks via its daily reverse repo auctions at 3.25 percent, overnight cash usually stay tagged to that rate at inter-bank market.

However, banks holding surplus government securities could pledge them at the collateralised money market and borrow at lower rates from cash-flush mutual funds, who are not participants in the inter-bank segment.

At 2:15 p.m., the overnight call money rate <INROND=> was at 3.20/30 percent, barely moved from its previous close of 3.25/30 percent.

Volume was at 81.06 billion rupees, compared with Monday's total of 67.68 billion rupees.

Banks parked 1.08 trillion rupees with the central bank on Tuesday through the reverse repo facility.

Traders said the surplus liquidity will continue to help cash rates remain low for quite some time as there is hardly any sign of growth in credit offtake from banks.

Indian bank loans <INLOAN=ECI> rose 9.8 percent on year as of Nov. 6, largely steady from 9.7 percent two weeks ago, central bank data showed on Friday. ((boby.michael@thomsonreuters.com; Tel: +91-22-6636 7377; Reuters Messaging: boby.michael.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))