A cash crunch is persisting in India, pushing short-term borrowing costs above a key policy interest rate and posing risks to an economy that needs cheaper funding to sustain its recovery.
After a surge in recent weeks, the weighted average call rate which Reserve Bank of India closely monitors, has shot above its policy rate ceiling of 6.75%. Yields on one-year treasury bills also have exceeded those on 10-year government debt, an anomaly often associated with a malfunctioning bond market.
Read More : Stubborn Cash Crunch Threatens India’s Economic Revival
