More Stories

Informist, Thursday, Jan. 30, 2025

By Siddhi Chauhan and Kabir Sharma

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate of 6.25% on Thursday as the demand for funds from banks eased towards the end of the day, dealers said. The one-day call money rate ended at 6.15%, against 6.50% on Wednesday.

The weighted average call rate was at 6.58%, unchanged from Wednesday. On Thursday, the weighted average triparty repo rate rose to 6.55% from 6.46% the previous day, as liquidity in the banking system remains tight. The net liquidity injected by the RBI--a proxy for systemic liquidity conditions--was INR 2.56 trillion on Thursday, as against INR 2.51 trillion on Wednesday.

Due to outflows of INR 320 billion for state government securities, inflows of around INR 300 billion-INR 400 billion from the government's month-end spending did not significantly affect the banking system liquidity, dealers said. Collectively, inflows for government month-end spending which started from Monday are expected to add INR 1.00 trillion to INR 1.20 trillion into the banking system, dealers said. The inflows may be lower than the usual INR 1.50 trillion as the government may stick to only mandated spending like salaries and pensions ahead of the Union Budget for 2025-26 (Apr-Mar) on Saturday, they said.

The liquidity deficit is expected to narrow in the coming days due to inflows from government month-end spending and from the RBI's liquidity measures announced earlier this week, dealers said. The central bank on Thursday bought government bonds worth INR 200.20 billion through an open market auction. On Friday, the RBI will conduct a dollar/rupee buy/sell swap of $5.00 billion, for a six-month tenor. The inflows for the same will hit the system on Tuesday as per RBI's press release. 

Following are the other highlights:

* Net outflows worth INR 91.87 billion, largely due to Treasury bill payments scheduled during the day.

* Reversal of overnight variable rate repo tender drained INR 1.67 trillion from the banking system.

OUTLOOK

* On Friday, the three-day call rate may open around the repo rate on demand for funds from banks.

* RBI will conduct a three-day variable rate repo auction for a notified amount of INR 1.00 trillion at 1000-1030 IST on Friday. 

* Inflows of INR 200.20 billion will be added into the banking system on account of the RBI's gilts purchases through the open market operation. 

CALL RATE

6.15%--Thursday's close for one-day loans

6.65%--Thursday's open for one-day loans

6.50%--Wednesday's close for one-day loans

BENCHMARK MIBOR (in %)

Mumbai Interbank Offer Rates compiled by Financial Benchmarks India:

India Call: Above RBI's repo rate due to demand for funds; VRR auction eyed

MUMBAI – The interbank call money rate was above the Reserve Bank of India's repo rate of 6.50% on Thursday due to demand for funds from banks early in the trade, dealers said. At 0945 IST, the one-day call money rate was at 6.65%, against 6.50% on Wednesday.

At 0930 IST, the weighted average triparty repo was at 6.51%, against 6.56% on Wednesday. The weighted average call rate was at 6.65%, unchanged from Wednesday.

On Wednesday, the net liquidity injected by the RBI--a proxy for systemic liquidity conditions--rose slightly to INR 2.56 trillion from INR 2.51 trillion on Tuesday. Despite some inflows from the government's month-end spending, payments for the state bond auction worth INR 320 billion offset any improvement in banking system liquidity.

"Yesterday (Wednesday) a very miniscule amount of government spending would have taken place, I am guessing around INR 300 billion to INR 400 billion," a dealer at a state-owned bank said. "The major chunk of these inflows will start from today." Collectively, government's month-end spending is expected to add INR 1 trillion to INR 1.2 trillion into the banking system in tranches, dealers said. The inflows may be lower than the usual INR 1.5 trillion as the government may stick to only mandated spending like salaries and pensions ahead of the Union Budget for 2025-26 (Apr-Mar) on Saturday, they said.

On Wednesday, banks increased the funds parked under the Standing Deposit Facility by around INR 200 billion to INR 833.66 billion. Market participants said that as the triparty rates cooled off in the second half on Wednesday to as low as 6.14%, banks borrowed funds from the market and parked them with the RBI under the Standing Deposit Facility at 6.25%.

The pressure on banking system liquidity is expected to ease slightly due to various liquidity operations announced by the RBI, dealers said. During the day, the central bank will buy five gilts through an open market auction, the first since September 2021. This auction will add up to INR 200 billion to the banking system. On Friday, the RBI will inject liquidity into the banking system by conducting a dollar/rupee buy/sell swap of $5 billion, for a six-month tenor.

At 1000-1030 IST, the RBI is conducting an overnight variable rate repo auction for a notified amount of INR 1.50 trillion. Market participants expect the auction to see bids ranging from INR 1 trillion to INR 1.50 trillion with a cut-off rate of 6.51%.

Following are the other highlights:

* Net outflows worth INR 91.87 billion largely due to Treasury bill payments are scheduled during the day.

* Reversal of overnight variable rate repo tender will drain INR 1.67 trillion from the banking system.

* During the day, the call rate is seen in a range of 6.00-6.90%. (Siddhi Chauhan)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.