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Informist, Saturday, Dec. 7, 2024

By Sachi Pandey

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 6.25% on Saturday, due to minimal demand for funds from banks. According to dealers, most banks had already met their funding needs for the weekend on Friday, resulting in low market activity.

On Saturday, the two-day call rate ended at 6.00%, against 6.24% for three-day loans on Friday. Trading volume was subdued, with only 70 trades worth INR 11.03 billion being settled.

According to data from the Reserve Bank of India, the liquidity surplus in the banking system narrowed to INR 423.70 billion on Thursday from INR 659.05 billion on Wednesday. Until the cut in cash reserve ratio comes into effect, liquidity is expected to remain tight as outflows for tax deducted at source and excise duty are expected to start from Friday, dealers said. The outflows are expected to drain around INR 500 billion from the banking system, dealers said.  

Announcing the outcome of the December Monetary Policy Committee meeting on Friday, RBI Governor Shaktikanta Das said the cash reserve ratio would be cut by 25 basis points effective from the fortnight starting Dec. 14, and by another 25 bps from the fortnight starting Dec. 28. The move is estimated to increase liquidity in the banking system by INR 1.16 trillion, Das said. The RBI's rate-setting panel left the policy repo rate unchanged at 6.50% and retained its 'neutral' policy stance.

Following are the other highlights:

* The weighted average call rate was 6.1546% against 6.55% on Friday.

* The weighted average rate for triparty repo was 6.57% as compared to 6.49% on Friday.

OUTLOOK

* On Monday, the one-day call money rate may open above the RBI's repo rate of 6.50% due to early demand for funds from banks to meet reserve requirements.

* During the day, the call rate is seen in a range of 6.00-6.75%, dealers said.

CALL RATE

6.00%--Saturday's close for two-day loans

6.60%--Saturday's open for two-day loans

6.24%--Friday's close for three-day loans

End

Edited by Avishek Dutta

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