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Informist, Saturday, Feb. 1, 2025

By Kabir Sharma

NEW DELHI – The interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 6.25% on Saturday due to low 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 6.65% for three-day loans on Friday. Trading volume was subdued, with only 76 trades worth INR 13.89 billion being settled compared with volume of INR 93.46 billion on Friday. Demand for funds also eased as liquidity in the banking system had slightly improved on Thursday. 

On Thursday, the net liquidity injected by the RBI--a proxy for systemic liquidity deficit--fell to INR 2.22 trillion from INR 2.56 trillion on Wednesday. The liquidity deficit narrowed due to inflows from the government's month-end spending, which would likely have added around INR 400 billion to the banking system on Thursday, dealers said. 

Owing to the fall in volume, the weighted average rate also fell below the repo rate in the money market. The weighted average call rate ended at 6.24% on Saturday, against 6.60% on Friday. In tri-party repo, the volume fell sharply to INR 293.53 billion on Saturday from INR 3.22 trillion on Friday, bringing down the weighted average tri-party repo rate to 6.06% from 6.58% on Friday. 

OUTLOOK

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

* During the day, the call rate is seen in a range of 6.00-6.90%, dealers said.

* RBI will conduct an overnight variable rate repo operation for a notified amount of INR 750 billion at 1000-1030 IST 

CALL RATE

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

6.65%--Saturday's open for two-day loans

6.65%--Friday's close for three-day loans

End

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

Edited by Deepshikha Bhardwaj

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