Banks seek term VRR, more OMOs

Rates have risen from 6.55% in December to 6.90%

- CHRISTINA TITUS

BANKS HAVE RAISED concerns over higher certificate of deposit (CD) rates with the Reserve Bank of India (RBI), said sources close to the development.

With tighter liquidity in the system, banks have ramped up their CD issuances amid rising credit demand and slow deposit growth.

This pushed up the short-term rates despite the 25-basis points (bps) rate cut in December. The continuous intervention in the forex market by the RBI on account of a weaker rupee is also draining out liquidity from the system.