More Stories

Informist, Tuesday, Jun. 10, 2025

By Siddhi Chauhan

MUMBAI – The interbank call money rate Tuesday ended at the Reserve Bank of India's Standing Deposit Facility rate of 5.25% as demand for funds was low because of ample liquidity and lower outflows, dealers said. "Rates are around the same level only as there were no significant outflows today. Outflows for excise duty are already done," a dealer at a state-owned bank said. "Banks were mostly on the lending side and primary dealers were borrowing in the call market."

The one-day call money rate ended at 5.25%, up from 4.90% Monday. The weighted average call rate was unchanged at 5.30%, while the triparty repo rate closed at 5.19% against 5.14% on Monday. The weighted average rate in the larger tri-party repo market was 5.19%, slightly down from 5.20% Monday.

The total money market volume was INR 5.85 trillion Tuesday, slightly up from 5.76 trillion Monday. Volume in the overnight call money market was similar to those on Monday at INR 1.47 trillion, while that in the triparty repo market was INR 3.85 trillion, slightly up from INR 3.75 trillion Monday.

Even though the demand for funds in the overnight call market was not high, some traders, likely primary dealers, borrowed through a 15-day tenure in order to preempt their fund requirements, dealers said. "If I know that I have some fund requirements on a daily basis and I am expecting the rates to rise in the coming days then it would be cheaper for me to borrow even at 5.75%," a dealer at a private sector bank said. "Usually interest from primary dealers for 15- to 20-day term repo is high in quarter crossing because if they are borrowing at that time, a premium will be charged on the weighted average rate of the required tenure. To avoid giving the premium, they borrow much before when rates are cheaper."

Money market rates are expected to rise due to outflows for advance tax which will likely start from Thursday, dealers said. These outflows are expected to drain INR 1.25 trillion to INR 1.50 trillion from the banking system, dealers said. The absence of daily variable rate repo which would have kept the rates anchored also led some banks to borrow beforehand, dealers said. The impact of advance tax outflows will be subdued due to inflows of INR 797.18 billion due from the maturity of 5.22%, 2025 bond. 

At the last daily variable rate repo operation undertaken Tuesday, the central bank received bids worth INR 38.53 billion against INR 250.00 billion notified. The amount was accepted fully by RBI at 5.51%. Market participants now see the money market rates rise above the Standing Deposit Facility but stay at the repo rate, dealers said.

OUTLOOK

* On Wednesday, the one-day call rate is likely to open near the RBI's repo rate of 5.50%.

* During the day, the call rate is seen in a range of 5.00-5.60% and the triparty repo rate in a range of 4.95-5.45%.

CALL RATE

5.25%--Tuesday's close for one-day loans

5.35%--Tuesday's open for one-day loans

4.90%--Monday's close for one-day loans

BENCHMARK MIBOR (in %)

Mumbai Interbank Offer Rates compiled by Financial Benchmarks India:

India Call:Below RBI's repo rate on comfortable liquidity, low funding needs

MUMBAI – The interbank call money rate was below the Reserve Bank of India's repo rate of 5.50% on Tuesday. Low demand for funds due to absence of significant outflows, and comfortable liquidity are expected to keep rates from rising above the RBI's repo rate, dealers said. 

The one-day call money rate opened at 5.35% Tuesday and, at 1000 IST, the weighted average call rate was also the same. The triparty repo rate, where mutual funds are major lenders, opened below the RBI's Standing Deposit Facility rate of 5.25%. At 1000 IST the triparty repo rate was at 5.21%, with the weighted average triparty repo rate at 5.20%.

The RBI on Monday said it would discontinue the daily variable rate repo auction from Wednesday on review of the current and evolving liquidity conditions. The RBI will conduct its last daily VRR auction for INR 250 billion from 1000 IST to 1030 IST Tuesday. At the auction, primary dealers and banks are expected to borrow only 15% of the notified quantum of INR 250 billion, dealers said. Traders expect total bids at the auction to be around INR 37.50 billion, lower than the INR 37.11 billion of bids received at the daily VRR auction Monday, and the cut-off rate is estimated at 5.51%, according to an Informist poll.

The move to discontinue daily VRR auctions was widely expected and dealers said it would not have much impact on money market rates. Primary dealers who were major borrowers at the daily variable rate repo auctions, don't expect the dicontinuation to be a worrying factor, dealers said. 

"PDs (primary dealers) won't have much of impact. I mean, either way the subscription amount is very less every day. The money market rates are below SDF, then why would anyone think of borrowing through VRR at repo rate," a dealer at a primary dealership said. "The only downside is that money market rates used to be anchored even at a time of outflows (because of daily VRR auctions). Now, I don't know how will they (RBI) will manage that."

On Monday, the RBI net absorbed INR 2.45 trillion, similar to Sunday, central bank data showed. Payment for corporate advance taxes, which is expected to be made by the end of this week, is estimated to drain out around INR 1.5 trillion to INR 2.00 trillion, dealers said. With the RBI suspending VRR auctions, rates may go up towards the end of the week, dealers said. Others, however, said that with liquidity in the system ample, rates will remain anchored. 

"There is ample liquidity in the system, some tick up in rates could be there on Friday and next week because of advance tax (outflows)," a dealer at a state-owned bank said. "But despite the drain (in liquidity), surplus will be enough. So, I dont see rates shooting up sharply."  End

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

Edited by Ashish Shirke

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.