FE Editorial : SBI’s gambit
Since the sums involved are fairly substantial—at least a fifth of the roughly Rs 8 lakh crore assets of the MF industry are accounted for by these short-term schemes—it’s not surprising banks are eyeing them. Of course, they might need to offer a better rate than they do now for seven-day deposits—SBI offers 6.5%—but that might turn out to be cheaper than borrowing in the wholesale market. The cost of wholesale rates had shot up sharply in the early part of the year to well over 10% and money would have been far tighter had the cuts in the cash reserve ratio (CRR)—175 basis points in 2012—not happened. Indeed, banks have been struggling to mobilise deposits; in the fortnight to November 30, deposits
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