Rates on short-term paper eased after the Reserve Bank of India (RBI) decided to free up funds for the commercial banks to tide over the present liquidity crunch. Rates for three-month commercial paper fell to 8.7%, down by 30 bps after the RBI eased liquidity coverage ratio norms for banks. Following the fund crunch triggered by the crisis at infrastructure financier IL&FS at the beginning of the month, rates on short-term papers rose by more than 100 bps (basis points) with mutual funds becoming reluctant to lend to the non-banking finance companies. To ease the situation, the central bank had been infusing liquidity through open market operations. RBI decided to allow banks to dip into their statutory liquidity ratio (SLR) reserves by another two percentage points to meet liquidity coverage ratio (LCR) norms. State Bank of India’s chief economic adviser Soumya Kanti Ghosh wrote in a report that the move would inject about Rs.2 lakh crore of assured liquidity at the repo rate. This would ensure the weighted average call money rate to be about the policy repo rate which is 6.5%.