Lenders’ overnight borrowings from the central bank to meet cash shortages, a gauge of interbank funding availability, dropped to 21.2 billion rupees ($380 million) today from 338.7 billion rupees on Aug. 30, official figures show. Loan growth averaged 17.3 percent so far in 2012, compared with 21.6 percent a year earlier. Asia’s third-largest economy grew 5.5 percent last quarter, following a 5.3 percent expansion in the previous three months that was the slowest since 2009.
“The drastic increase in liquidity has pushed down swap rates,” said Debendra Kumar Dash, a fixed-income trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “Banks are awash with cash as a slower economy has affected credit growth.”
The fixed payment to lock in one-year borrowing costs fell one basis point to 7.75 percent in Mumbai, according to data compiled by Bloomberg. That is the lowest level since Aug. 10.
The yield on the 8.15 percent notes due June 2022 dropped two basis points, or 0.02 percentage point, to 8.16 percent in Mumbai, according to the central bank’s trading system. That was the lowest level since Aug. 9.
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