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Yields dip below bank rate

Mumbai, Dec. 26: Yields on key government securities closed below the bank rate of 6.25 per cent for the first time today.

The yields have been on a crash course ever since the presentation of the monetary and credit policy on October 29. Sources said that apart from the comfortable liquidity situation, banks have been parking their funds in government securities due to restrictions imposed by the Reserve Bank in the call money market.

Yield on the 10-year security ended below the bank rate of 6.25 per cent at 6.24 per cent as against the previous close of 6.27 per cent. The 7.40 per cent 2012 security ended at Rs 108.05, while the 11.50 per cent 2011 closed at Rs 135.10. Similarly, the 7.46 per cent 2017 security ended at Rs 114.49.

Meanwhile, the RBI today said banks can maintain at least 70 per cent of the daily cash reserve ratio requirement, down from 80 per cent earlier. This relaxation will help banks choose an optimum strategy of holding reserves.

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