In the US markets this picture was relatively common  a slending banks swept up securities to collateral on margin for derivatives exposure. Whatever other reasons be in pace, Indian banks are finding the 9.5% Marginal standing Facility ( Marginal Stability Facility) window of the rBI attractive for borrowing upto $400 mln overnight and that could actually be a healthy precursor to rate cuts that we need

RBI is said to be concerned about the $30 bln deficit in the inter bank market but that is likely an adjustment figure for tomorrows buy back auction and the deficit is likely much larger which if it breaks out after the auction within the later 10-14  days will be really "risky business"

Posted via email from The India Investment Post