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Informist, Monday, Aug. 18, 2025

 

By Srijita Bose

 

MUMBAI – The interbank call money market rate ended sharply below the Reserve Bank of India's Standing Deposit Facility rate of 5.25% Monday as surplus liquidity in the banking system was above INR 3 trillion. The RBI's three-day variable rate reverse repo auction of INR 250 billion Monday pushed up rates earlier in the day. 

 

The one-day call money market rate settled at 4.95%, compared with Saturday's two-day close of 5.00%. The call rate moved in a range of 4.70-5.55% Monday. The weighted average call money rate was at 5.40%. The triparty repo market rate closed at 5.20% with the weighted average rate at 5.32%. 

 

At the VRRR auction, traders parked around INR 233.60 trillion due to comfortable banking system liquidity. Traders were not expecting this auction ahead of goods and service tax outflows next week. On Thursday, traders had parked around INR 1.83 trillion with the RBI in the eight-day VRRR auction, which is set to reverse Friday.

 

The call rate was near the repo rate at open. However, rates fell later in the day due to absence of significant scheduled outflows during the day, dealers said. Primary dealerships were the major borrowers during the day, they said. 

 

"Rates could be under slight pressure after the GST outflows begin," a dealer at a private sector bank said. "However, liquidity is good so it might not be much given of course that there are not much VRRR auctions." 

 

As per latest data from the RBI, the central bank net absorbed INR 3.12 trillion from the banking system on Sunday, similar to INR 3.11 trillion Saturday. Traders are of the view that surplus liquidity will remain around current levels until the outflows for goods and services tax payouts, which are expected to commence on Thursday, and have pegged the outflows at around INR 1.70 trillion to INR 1.90 trillion. 

 

OUTLOOK

* On Tuesday, the one-day call money rate may open below the RBI's repo rate of 5.50% as surplus liquidity is expected to remain above INR 3 trillion. 

* During the day, the call rate is seen in a range of 4.70-4.60%, dealers said.

 

CALL RATE

4.95%--Monday's close for one-day loans

5.45%--Monday's open for one-day loans

5.00%--Saturday's close for two-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	THURSDAY
Overnight	5.45	5.53
3-day	--	--
14-day	5.71	5.74
1-month	5.99	5.99
3-month	6.10	6.10

 

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India Call: Below repo rate with INR 3-tln surplus systemic liquidity

 

MUMBAI – The interbank call money market rate was below the Reserve Bank of India's repo rate of 5.50% Monday as surplus liquidity in the banking system was above INR 3 trillion, dealers said. Absence of significant scheduled outflows is expected to keep banks' funding needs subdued during the day, which will likely push the rates further down, they said. In early trade, borrowing demand was mostly seen from primary dealerships in the call money market.

 

At 0920 IST, the one-day call money market rate was at 5.45%. The weighted average rate was also at the same level. The rate in the triparty repo market was 5.34% and the weighted average rate was 5.35%. 

 

"Liquidity is quite good, and the outflows will also start after Aug. 20. So, for now, there is not much pressure on market rates," a dealer at a state-owned bank said. "After today's VRRR, there could be some tightness in liquidity, but till GST payments we might not see much hardening of rates."

 

The central bank had net absorbed INR 3.03 trillion from the banking system Thursday, slightly higher than INR 2.90 trillion on Wednesday, RBI data showed. Banks had also parked INR 1.83 trillion with the RBI at its eight-day variable rate reverse repo auction Thursday. Money markets were shut on Friday on account of Independence Day . Traders are of the view that surplus liquidity will remain around current levels until the outflows for goods and services tax payouts, which are expected to commence on Thursday. Traders have pegged the outflows at around INR 1.70 trillion to INR 1.90 trillion. 

 

The central bank also held a three-day variable rate reverse repo auction Monday for INR 250 billion. Most traders expect the auction to be fully subscribed as the reversal of the auction is scheduled for Thursday, which will not lead to pressure on liquidity as tax outflows start. Moreover, lower rate in the triparty repo market in early trade is also expected to lead some banks to take advantage of arbitrage by parking funds at a higher rate at the auction, dealers said.

 

"The (call money market) rate opened slightly higher today because of this (three-day variable rate reverse repo) auction only. Otherwise, it would have been near 5.40% only," a dealer at a private sector bank said. "After the auction, we can see the rates easing as there is not much borrowing from banks right now, only PDs are there."  (Vidhushi RajPurohit)

End

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

 

Edited by Akul Nishant Akhoury

 

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