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Indian banks seek cash, driving up rates

09-21-2010 09:48 BJT

Indian banks are increasing borrowing from the country's central bank, hitting the highest level since July. A cash shortage is driving up the short-term interest rate.

Overnight lending rates climbed to a six-month high of 6.1 percent on September 17th, from 5.25 percent a week earlier. Companies paid their taxes this month, and locals withdrew cash ahead of the country's religious holidays. For four consecutive months, Indian banks borrowed more than they deposited with the monetary authority.

The Indian authorities raised interest rates for a fifth time this year last week, and reined in money supply growth to help cool inflation. Experts say until inflation begins to dissipate, the central bank may continue to keep cash conditions tight.

Editor:Xiong Qu |Source: CNTV.CN

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