Funds which are placed / borrowed overnight are known as overnight deposit. Rates of the overnight deposit are fixed on a daily basis and the rate keeps on changing on the basis of demand and supply per day. It is used to meet up the daily fund management of all financial institutes. Overnight deposit is also known in the market as call deposit.
City Bank is an active participant of the inter-bank call market. City Bank injects market liquidity and plays an important role in the inter - bank call money market.
Benefits
- Due to the nature of product it has minimum credit risk as the tenure is overnight.
- Very effective tool to manage daily liquidity management.
- Call money rates indicate the market liquidity.
- Traded in bulk volume.