Banks have been borrowing heavily from the Tri-Party Repo (TREPS) market and deploying those funds into the Standing Deposit Facility (SDF) of the Reserve Bank of India (RBI), which is offering higher interest rate than the former, leading to increased volumes in the SDF window. The weighted average TREPS rate was trading at 5.66 per cent on Monday, 9 basis points lower than the SDF rate which currently stands at 5.75 per cent.
The Reserve Bank of India (RBI) has extended the trading hours for the interbank call money market from July 1, and that of repo and tri-party repo markets from August 1. Market participants said the decision is intended to help reduce the large Standing Deposit Facility (SDF) balances held by banks with the RBI, thereby addressing liquidity mismatches.
'Liquid ETFs help in cash management by enabling a smooth transition between equity and cash within the same settlement cycle, as they trade in the same segment as equity.'
The banking system neared Rs 1.47 trillion of liquidity deficit on Monday, the highest since January 29, 2020, when the banking system liquidity deficit went up to Rs 3 trillion. The Reserve Bank of India (RBI) injected Rs 1.47 trillion on Monday and Rs 1.46 trillion on Tuesday. Market participants say that the disbursement of Rs 25,000 crore as the second tranche of incremental cash reserve ratio (I-CRR) will not be enough, and the liquidity might tighten further to Rs 2 trillion in short term due to tax outflows and arrival of the festival season.
Funds raised by banks through certificates of deposit in December clocked the highest in the financial year 2023-24 as liquidity remained tight in the system with the Reserve Bank of India (RBI) infusing Rs 2.01 trillion on Monday, the highest in the current financial year. The liquidity deficit in the banking system widened to more than Rs 2 trillion on Monday on the back of advance tax outflows, market participants said. Around Rs 4 trillion worth of outflows are expected because of advanced tax and goods and services tax (GST) payments in December.
The Securities and Exchange Board of India (Sebi) might relax the disclosure norms around rumour verification to help smooth implementation and ease compliance amid pushback from India Inc, said people in the know. The rule has been notified following amendments to the Listing Obligations and Disclosure Requirements (LODR) by Sebi. However, its implementation has been deferred until February.
These schemes are a good choice for investors contemplating a large investment in equity funds. Instead of investing all the money in one go, they can do so in a staggered manner by parking it in these schemes and then transferring it to equity mutual funds through a systematic transfer plan.
The volume in the anonymous trading platform, NDS-OM, was Rs 7,210 crore - less than half the normal volume, but not as bad as the start of the day indicated.
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