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Informist, Tuesday, Aug. 19, 2025

 

BY Srijita Bose

 

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 5.25% in the absence of any major outflows during the day, dealers said. However, the weighted average call rate was higher than on Monday, with INR 2.00 trillion parked with the RBI under variable rate reverse repo auctions before outflows for goods and services tax payments begin later in the week, they said.

 

The one-day call money market rate settled at 5.00%, compared with 4.95% Monday. The call rate moved in the range of 4.70-5.52% Tuesday. The weighted average call money rate was 5.43%, up from 5.40% Monday. The triparty repo market rate closed at 5.25% with the weighted average rate at 5.34%. The triparty repo market rate had closed at 5.20% Monday, with the weighted average rate being 5.32%.

 

"There were not outflows scheduled today, so rates were fine," a dealer at a private-sector bank said. "Mutual funds were not lending much in TREPS (triparty repo market). I think they used some cash positions and put in equities."

 

When the market opened, rates were higher as lenders seemed reluctant to lend, dealers said. Market participants did not want to lend aggressively ahead of GST outflows, which some said could begin Wednesday. The outflows are likely to drain between INR 1.75 trillion and INR 1.85 trillion from the banking system. Moreover, the total funds that banks have parked with the RBI at the variable rate reverse repo auctions will not be reversed until Thursday, which is expected to keep money market rates under pressure. Thursday's reversal of Monday's three-day VRRR auction will release INR 233.60 billion, which will not be enough to offset the GST outflows, dealers said.

 

"Rates are fine today, it's good for lenders and it's a good opportunity for borrowers also," a dealer at a state-owned bank said. "Tomorrow, rates could be on the higher side since GST outflows start on Aug. 21."

 

As per the latest data from the RBI, the central bank net absorbed INR 3.06 trillion from the banking system Monday, slightly lower than INR 3.12 trillion Sunday. Traders tracked the liquidity surplus closely as some of the short forward dollar positions of the RBI are likely to mature this week, dealers said. Until the end of September, the net short forward dollar positions of the central bank in the foreign exchange market amounted to $11.85 billion, data from RBI showed.

 

OUTLOOK

* On Wednesday, the one-day call money rate may open near the RBI's repo rate of 5.50% on demand for funds ahead of GST outflows. 

* During the day, the call rate is seen in the range of 4.90-5.70%, dealers said.

 

CALL RATE

5.00%--Tuesday's close for one-day loans

5.50%--Tuesday's open for one-day loans

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

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.48	5.45
3-day	--	--
14-day	5.73	5.71
1-month	5.99	5.99
3-month	6.11	6.10

 

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India Call: At repo rate as INR 2 tln parked with RBI under VRRR auctions

 

MUMBAI – The rate in the interbank call money market was at the Reserve Bank of India's repo rate of 5.50% on increased borrowing needs as banks have parked INR 2.06 trillion with the central bank under its variable rate reverse repo auctions of varied tenures, dealers said. Lack of participants on the lending front and requirement of funds from primary dealerships in early trading hours also pushed the call money market rate higher, they said. Some traders expect rates to cool later in the day due to lack of major outflows. 

 

"Lenders are not that active in the market right now and some are avoiding to give away funds because most have deployed their funds at VRRR auctions," a dealer at a private sector bank said. "Some traders are also getting late due to the heavy rains, so that is also leading to less people on the lending side." The weather department has issued a red alert for Mumbai for Tuesday. In the past 24 hours, almost all weather stations across Mumbai recorded more than 120 millimetres of rainfall, according to data from the weather department.

 

At 0920 IST, the one-day call money market rate was at 5.50%. 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 5.32%. Most traders do not expect the RBI to conduct a variable rate reverse repo auction for the day on account of upcoming outflows for goods and service tax payouts, which are expected to commence Thursday and are likely to drain around INR 1.75 to INR 1.85 trillion from the banking system. Moreover, the total funds that banks have parked with the central bank at the variable rate reverse repo auctions will not reverse until Friday, which is expected to keep money market rates under pressure.

 

As per latest RBI data, the central bank had net absorbed INR 3.06 trillion from the banking system Monday, slightly lower than INR 3.12 trillion on Sunday. Some demand for funds is also expected from banks to maintain cash reserves with the RBI. On Monday, banks maintained INR 9.42 trillion with the RBI, lower than the mandated average daily requirement of INR 9.58 trillion for the current fortnight ending Friday. So far in the current fortnight, banks have maintained an average figure of INR 9.70 trillion with the RBI as cash reserves. 

 

"Once the tax outflows start, there will be a crunch and therefore right now, banks will try to maintain higher sum and not be at a shortfall on reporting Friday," a dealer at a state-owned bank said. Some traders also expect the RBI to gauge the money market rates post the tax outflows and conduct a variable rate repo auction, provided rates surge sharply higher than the repo rate, dealers said.  (Vidhushi RajPurohit)

 

End

 

US$1 = INR 86.95

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

 

Edited by Rajeev Pai

 

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