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Mar 08, 2013
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CD issuances decline as banks reach 10% cap
With most public sector banks reaching the 10 per cent cap on certificates of deposit (CDs), primary market issuances have almost halved, according to dealers and traders.Yesterday, banks had raised around Rs 1,800 crore by issuing two and three month papers, down from about Rs 4,000 crore raised last Friday. Today, there was no such short term issuances. Banks have raised resources by issuing six-month and one-year paper.The finance ministry had asked the public sector banks to limit their reliance on CD to 10 per cent of their total deposit, while the combined cap on bulk deposits and CDs were kept at 15 per cent. The ministry's directive came after banks scrambled for cash in the last month of the previous financial year to meet their year-end target, which resulted in rates going through the roof. Three month CD rates have gone past 12 per cent in the last fortnight of March last year.
Source -
http://www.business-standard.com
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