Banks preparing to hike discounts to their PLRs(The Hindu Business Line 3rd Jan 2008)In a bid to stimulate credit offtake in the peak seasons, banks are preparing to offer discounts to their respective benchmark prime lending rates (BPLR).
Currently, only highly rated corporates are raising bank funds at discounts to the BPLR, that currently ranges 12.75 per cent to 13.5 per cent. The discounts, even for these corporates, are barely about 100 basis points. Yet despite the discounts, the average cost of borrowings was close to 11 per cent.
Bankers said that one of the major factors that prevented corporate credit offtake was the high rates. The only other sector drawing credit at low rates was the farm sector. Farm loans are dispensed at 7 per cent, as banks are entitled to a Government subsidy of another 2 per cent, taking the effective yield on the advances to 9 per cent. Bankers said that the discounts were likely to be raised by another 50 to 100 basis points in the coming weeks, if offtake did not improve. More
Short-term rates fall on surplus cash (Business Standard 3rd Jan 2008)
Short-term interest rates fell substantially today following an improvement in the liquidity situation.
It resulted in the cut-off yields at the auction of 91-day and 364-day treasury bills dropping to 7.02 per cent and 7.38 per cent respectively. During December, the cut off yield on the 91-day t-bill was fixed at 7.52 per cent and the 364-day bill at 7.71 per cent.
After ruling tight since mid December, the system was once again flush with liquidity following outflows towards advance taxes and the government borrowing programme, according to dealers. More
Currently, only highly rated corporates are raising bank funds at discounts to the BPLR, that currently ranges 12.75 per cent to 13.5 per cent. The discounts, even for these corporates, are barely about 100 basis points. Yet despite the discounts, the average cost of borrowings was close to 11 per cent.
Bankers said that one of the major factors that prevented corporate credit offtake was the high rates. The only other sector drawing credit at low rates was the farm sector. Farm loans are dispensed at 7 per cent, as banks are entitled to a Government subsidy of another 2 per cent, taking the effective yield on the advances to 9 per cent. Bankers said that the discounts were likely to be raised by another 50 to 100 basis points in the coming weeks, if offtake did not improve. More
Short-term rates fall on surplus cash (Business Standard 3rd Jan 2008)
Short-term interest rates fell substantially today following an improvement in the liquidity situation.
It resulted in the cut-off yields at the auction of 91-day and 364-day treasury bills dropping to 7.02 per cent and 7.38 per cent respectively. During December, the cut off yield on the 91-day t-bill was fixed at 7.52 per cent and the 364-day bill at 7.71 per cent.
After ruling tight since mid December, the system was once again flush with liquidity following outflows towards advance taxes and the government borrowing programme, according to dealers. More
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