Rupee within range
Mumbai: The rupee remained trading within range on Tuesday. The Indian currency opened at 40.36/37 and saw an intra-day high of 40.33 backed by strong dollar supplies and closed at 40.36/37 against the previous close of 40.35/37.

Market participants expect the rupee to strengthen further this week. In forwards, the six-month premi a closed at 1.41 per cent (1.77 per cent) while the 12-month premia closed at 1.65 per cent (1.86 per cent).

Bonds: Bonds closed at around 40 paise as surplus cash in the system aided the buying sentiment.

G-secs: The 7.49 per cent-10 year-2017 paper opened at Rs97.30 (7.88 per cent YTM) and ended at Rs97.59 (7.84 per cent YTM), against the previous close of Rs97.18 (7.91 per cent YTM).

The 8.33 per cent-29 year-2036 paper opened at Rs99.53 (8.37 per cent YTM) and ended at Rs99.76 (8.35 per cent YTM), against the previous close of Rs99.45 (8.38 per cent YTM).

Call rates: The inter-bank call rates closed at 0.25-0.35 per cent on Tuesday, lower than the previous close of 0.4-0.5 per cent. The Reserve Bank of India received bids for Rs1,02,535 crore through the reverse repo window under the two sessions of Liquidity Adjustment Facility while it accepted Rs1,999 crore.

Reverse repo: The central bank did not receive any bids through the repo window. In the first one-day reverse repo auction, the RBI received 47 bids for Rs66,970 crore while it accepted Rs1,996 crore. In the second one-day reverse repo auction, the central bank received 38 bids for Rs35,565 crore while it accepted Rs1,003 crore. There were no repo bids in the first and second one-day auctions.

CBLO: The CBLO market saw 231 trades aggregating Rs24,730.25 crore in the 0.02-1 per cent range.
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UCBs can act as agents
Mumbai: The Reserve Bank of India will now allow Urban Co-operative Banks to act as agents or sub-agents under money transfer service schemes. Urban Co-operative Banks, who hold an authorised dealer licence (under category I and II), can act as agents or sub-agents for schemes which are in conformity with the guidelines issued by the foreign exchange department, said an RBI notification. Banks have been asked to strictly adhere to Anti Money Laundering and Know Your Customer stan dards.
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Ministry tells PSBs to raise low cost funds
Bangalore: The Union Finance Ministry has asked public sector banks (PSBs) to focus on raising low-cost funds, particularly current account and savings account (CASA).

Most large banks currently have a CASA base of barely 20 per cent.

The Ministry, at a meeting with top bankers, has conveyed that it wanted this ratio to be raised to 35 per cent of their respective demand and time liabilities, said the head of a PSB who attended the meeting.

Among the banks that are close to the Ministry's prescribed CASA, are Central Bank of India and Vijaya Bank.

The Ministry's concern is largely due to PSBs offering high interest rates on short-term deposits at rates close to 10 per cent. Such rates were being offered for tenures of slightly above one year. Bankers said that one of the major areas of concern for the Ministry was that the high rates were inconsistent with the current inflation trend. With year-on-year inflation at just 4.3 per cent, the real rates were well over 5 per cent. Historically, one-year real deposit rates have seldom exceeded 2 per cent.

The Government's fear was that such high rates would lead to a cost push effect on lending rates. The implication was that the current regime of high rates would lead to an escalation in the weighted average cost of working funds and in turn impact credit offtake, particularly in the productive sectors and adversely impact the GDP growth target of 9 per cent.
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