Banks to benefit from easing of short-term borrowing cost

RELIEF TO BANKS, SHARES RISE

- SACHIN KUMAR

THE DECISION OF the Reserve Bank of India (RBI) to inject ₹1.5-lakh-crore liquidity into the banking system is expected to bring down short-term borrowing costs for lenders, according to bankers.

The announcement has led to a sharp decline in certificate of deposit (CD) rates, with the one-month rate dropping by 15 basis points to 7.25% and the three-month rate falling by 10 basis points to 7.5% in just one day. The weighted average call rate eased to 6.55% on Tuesday from 6.57% on Monday.