A Prasanna, chief economist, I-SEC PD, on Thursday said that the commercial paper market was normalising and that the issuances were taking place. He added that the cost of fund raising was going up.

According to him, the Reserve Bank of India (RBI) is not worried about inflation when providing liquidity.

With regards to Cash Reserve Ratio (CRR), he said it is seen as "some sort of taboo instrument by the RBI but that has to change because it can be used as some sort of tool for proactive liquidity management and sent out signals to banks."

"If one were to look at FY20, the RBI inflation range is broadly between 4.5-5 percent and prior to this recent oil movement, the consensus expectation was higher and from that point of view the RBI expectation was conservative and so may not need to adjust that too much," said Prasanna.

According to him, the market expectations are rapidly changing depending on oil prices and so there is a case for lower yields. As far as 10-year bond yields are concerned the fiscal risks are still there, so the curve can steepen more, said Prasanna.