Indian bond yields rise, more policy measures eyed

* Traders expect cut in statutory bond holding limit

* Cash improves, o/n rates ends lower around 10 pct (Updates to close)

By Anurag Joshi

MUMBAI, Oct 13 (Reuters) - Indian federal bond yields rose on Monday after falling early, on expectations the central bank would reduce the proportion of deposits banks need to invest in government securities, freeing cash for loans.

The 10-year federal bond yield IN082418G=CC ended at 7.80 percent, off an early low of 7.69 percent, and a tad higher than Friday's close of 7.79 percent. Volume was a high 75 billion rupees ($1.6 billion).

On Saturday, the Reserve Bank of India (RBI) cut the cash reserve ratio (CRR), the amount that banks must keep as deposit with the central bank, by a hefty 150 basis points releasing 600 billion rupees.

Overnight call money rates INROND= ended at 9.75/10.0 percent, lower than 15.5/16.0 percent on Friday when it touched a 19-month-high of 23 percent during trade. Traders said lower call money rates reflected improved cash supplies in the system.

"While the CRR cut released cash and boosted sentiment, hopes of an SLR cut provided banks the reason to sell bonds," a trader with a foreign bank said, referring to statutory liquidity ratio.

Banks are now required to invest at least 25 percent of their deposits in government bonds.