The country's 10 largest banks have told the Reserve Bank of India that the continued tightness in lendable resources might compel them to slow credit growth substantially in 2007-08.

This outlook on medium-term credit exists even as overnight call money rates rose to a decade's high of 75 per cent in intra-day trading, before closing at 40 per cent.

These highs follow the demand for funds to meet advance tax payments, government bond auctions and the impact of increases in the cash reserve ratio, the amount of cash the RBI requires banks to keep with it as a measure to reduce liquidity in the system.

To ease liquidity exigencies at some banks, the RBI on Wednesday allowed banks with excess investment in government bonds to borrow from it and on-lend it in the inter-bank market.

RBI lends to banks at 7.5 per cent against deposit of government bonds through the repo (repurchase) window under the liquidity adjustment facility. The RBI injected around Rs 45,000 crore (Rs 450 billion) on Wednesday through the repo route.

Meanwhile, Finance Minister P Chidambaram has ascribed the rise in call rates to advance tax payments and said it would be "all right in a few days as ministries start spending money."

Senior bankers from large banks have met RBI officials for quarterly reviews over the last two weeks and their consensus view has been that liquidity conditions remain "challenging" and would have a bearing on the kind of credit growth to which they could "aspire" in 2007-08.

The RBI has been coaxing banks to moderate credit growth close to 20 per cent for almost a year now, but the expansion in lending continued unabated at 29.8 per cent as late as March 10.