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Informist, Saturday, Apr. 5, 2025

By Siddhi Chauhan

MUMBAI – The interbank call money rate fell below the standing deposit facility of 6.00% on Saturday due to low demand for funds from banks, dealers said. Improvement in the banking system liquidity also dampened banks demand resulting in trade volumes to fall to just INR 15.39 billion with only 64 trades against INR 153.97 billion on Friday. 

The two-day call money rate ended at 5.75% against 6.00% on Friday for three-day loans. The weighted average call rate was at 5.77% Saturday, down from 6.11% on Friday, while the weighted average rate in the larger tri-party repo market, which includes mutual funds, was at 5.89%, against 5.90% Friday.

On Thursday, the net liquidity absorbed by the Reserve Bank of India was INR 2.16 trillion, with banks parking a record high of INR 4.13 trillion at the Standing Deposit Facility. The systemic liquidity has improved due to a higher-than-expected government month-end spending and an infusion of funds through various liquidity measures by the RBI. On Friday, inflows of INR 200 billion would have been added into the banking system due to payment of gilts purchase through open market operation auction. The auction for the same was held on Thursday. However, the inflows may barely have an impact on the liquidity due to outflows of INR 1.25 trillion for the reversal of two long-term variable rate repos conducted in February.

In the coming days, some strain on banking system liquidity is expected as outflows for excise duty and tax deducted at source, dealers said. Outflows for the same which are expected to start likely from Monday may drain around INR 500 billion to INR 600 billion, dealers said.  

OUTLOOK

* On Monday, the one-day call money rate may open near the RBI's repo rate of 6.25% 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 5.75-6.40%, dealers said.

CALL RATE

5.75%--Saturday's close for two-day loans

6.15%--Saturday's open for two-day loans

6.00%--Friday's close for three-day loans

End

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

Edited by Akul Nishant Akhoury

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