Bank loans jumped to a 17-month high in the two weeks to September 6 as borrowers made a rush for them, abandoning the commercial paper (CP) markets. The reason — higher short-term rates have made commercial papers unattractive. Besides, companies are picking up money that's part of loan amounts already approved but not borrowed. This sets the tone for banks to raise base rates in the weeks ahead as busy season credit demand after an abundant monsoon is likely to push up demand for loans. Bank loans touched Rs54-lakh crore in the fortnight ended September 6, up 18.2% from the year ago. Much of the loan growth happened after the July 14 liquidity-tightening measures announced by the Reserve Bank of India to shore up the falling rupee.
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