The move is likely to transalate into profits for primary dealers (PDs) in the government securities market. Operations of the six PDs were affected in the fiscal 1999 after RBI hiked the interest rates and trading volumes declined.

PDs gain through the liquidity support from the Reserve Bank via repos in 91-day T-Bill and government securities at 8 per cent. "We are comfortable when interest rates are heading downwards or when there is volatility. But when interest rates are headed upwards or stable our operations are affected," a top official at a PD said.

However, there is a feeling that the cut in interest has come slightly later in the day for the PDs. "We just have two fortnights to make up," the official said.

Among the more important southward corrections will be the ones in the export refinance facility to banks. Stategovernments also stand to benefit from the lowering in bank rate as shortfalls in minimum balances, and ways and means advances will be at 8 per cent with that on overdrafts priced at 10 per cent. Similarly, penal interest rates on bank's reserve shortfalls range between 11 per cent and 13 per cent.

State co-operative banks (SCBs) will get Reserve Bank assistance towards clearing adjustments and liquidity at 10.5 per cent; and refinance to the National Bank for Agriculture and Rural Deveopment (Nabard) in terms of general line of credit (GLC-1) and GLC-2 at 2.5 per cent and 3 per cent. GLC-1 is refinance to Nabard in respect of loans and advances for the purposes of seasonal agriculture operations made by SCBs and regional rural banks (RRBs). GLC-2 is refinance to SCBs, RRBs and commercial banks to in turn refinance weavers co-operative society and other approved short-term purposes.

Other downward adjustments are in export credit finance facility to primary (urban) co-operative banks and to small sectorindustries at the new bank rate of 8 per cent.