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Informist, Friday, Sept. 5, 2025

By Shravani Chandiwade

MUMBAI – The interbank call money rate ended sharply below the Reserve Bank of India's Standing Deposit Facility rate of 5.25% Friday due to muted funding needs from market participants as they had met their funding needs Thursday, dealers said. Trading volume in the call money market Friday was also sharply down as most bank branches were closed on the occasion of Id-e-Milad. However, banks in Mumbai city and its suburban regions were open as the Maharashtra government shifted the holiday to Monday. Following this, the Reserve Bank of India Thursday announced that money markets would be operational on Friday, which was earlier a holiday.

The four-day call market ended at 5.10%, down from 5.50% Thursday. The weighted average ended at 5.00%, down from 5.38% Thursday. Volume traded in the call market was at INR 924 million, sharply down from INR 173.67 billion on Thursday. The transactions done in the market on Thursday will reverse on Tuesday, along with Friday's transactions due to the rescheduling of the holiday.

"Thursday banks had locked up the majority of their funds in VRRR, and they were also seen active on the lending front (Thursday) considering the long weekend ahead," a dealer at private sector banks said, "Hence, now banks don't have much funds to lend and most of the banks are shut, so there was not much activity in the call market throughout the day."

The triparty repo market ended at 5.10%, sharply down from its previous close 5.73%. The weighted average triparty repo rate ended at 5.28%, down from 5.36% Thursday. The total volume traded in the tri-party repo market was INR 284.90 billion. "Banks tap the market to borrow for their minor requirements," a dealer at a private sector bank said.

As per the latest data from RBI, the central bank net absorbed INR 2.87 trillion from the banking system Thursday, slightly lower than INR 2.97 trillion Wednesday. Meanwhile, banks increased their cash reserves with the central bank to INR 9.60 trillion Thursday from INR 9.42 trillion Wednesday. The daily average cash reserve requirement for the fortnight ending Friday is INR 9.63 trillion.

The central bank will cut the CRR by 100 basis points to 3% of banks' net demand and time liabilities in four tranches starting Sept. 6, Governor Sanjay Malhotra had said in the June Monetary Policy Committee's outcome. These tranches will add liquidity every four weeks until November-end. Based on the latest available data, total bank deposits as of Aug. 22 stood at INR 235.04 trillion, implying a total liquidity infusion of INR 2.35 trillion once the CRR cut is fully implemented.

OUTLOOK

* On Saturday, the three-day call money rate will likely open below the RBI's repo rate of 5.50% on low funding needs. 

* As is the case on Saturday, trading volumes may be muted.  

* During the day, the two-day call rate is seen in the range of 4.65-5.50%, dealers said.

CALL RATE

5.10%--Friday's close for four-day loans

5.60%--Friday's open for four-day loans

5.50%--Thursday's close for four-day loans

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Above repo; activity less as most banks shut for Id-e-Milad

MUMBAI–-1045 IST--The interbank call money market rate opened above the Reserve Bank of India's repo rate of 5.50% Friday because fewer lenders were active in the market as bank branches were shut in the country, barring Mumbai city and Mumbai suburban districts, on account of Id-e-Milad, dealers said. Demand for funds from some banks was also high in the early trading hour as they had already lent their excess funds in the money market Thursday considering Friday to be a scheduled holiday, they said. 

The four-day call money market rate was at 5.60% as of 1035 IST and the weighted average call rate was also at the same level. Rates will likely inch lower once the early trade rush ebbs, dealers said. Moreover, there are no significant scheduled outflows for the day and volumes in the money market are also expected to remain subdued as most banks have met their cash reserve needs Thursday, they said. Banks increased their cash reserves with the central bank to INR 9.60 trillion Thursday from INR 9.42 trillion Wednesday. 

"There is not much volume and not many traders are on desk because we had planned our funding needs thinking of Friday as a holiday," a dealer at a private sector bank said. "Only the branches in Maharashtra are open today (Friday), so there will be requirement only from that angle."

The call market opened at 1020 IST and the volume in the call money market was at INR 100 million as of 1035 IST. This was sharply lower than INR 91.05 billion Thursday.  (Vidhushi RajPurohit) 

India Call: Not dealt as of 0950 IST as most bank branches shut Fri for Eid

MUMBAI – There were no trades in the interbank call money market rate as of 0950 IST as most bank branches across the country were shut Friday on account of holiday for Eid-e-Milad, dealers said. Post market hours, the Reserve Bank of India shifted the settlement in money market to Monday from Friday, and therefore most banks had already met their reserve requirements on Thursday, they said. 

If the call money market opens later in the day, the rates are likely to remain near the central bank's repo rate of 5.50% as lenders would be reluctant to deploy funds after already having parked funds under eight-day variable rate reverse repo auction for INR 1.50 trillion on Thursday. Moreover, on Thursday, the settlement in the call money market changed from Monday to Tuesday and traders transacted some deals on expectations of reversal of the funds in five days.

"The volume in the call market will not be that high as in all the other states banks are shut," a dealer at a state-owned bank said. "When the market opens, the rate will be slightly higher as you are already seeing in TREPs also because there are not many lenders in the market."

At 0930 IST, the rate in the tri-party repo market was 5.55% and the weighted average rate was 5.52%. Trade volume in the call market was INR 91.05 billion Thursday. Traders do not expect variable rate repo auction from the central bank as they don't see the rate rising sharply during the day, dealers said. There will be some demands from the banks in the early trading hour for their intraday needs as they had locked up funds at the RBI's variable rate reverse repo auction Thursday. However, they expect the rates to cool off later in the trading session as surplus liquidity remains ample. 

As per the latest data from RBI, the central bank net absorbed INR 2.87 trillion from the banking system Thursday, slightly lower than INR 2.97 trillion Wednesday. Meanwhile, banks increased their cash reserves with the central bank to INR 9.60 trillion Thursday from INR 9.42 trillion Wednesday. The daily average cash reserve requirement for the fortnight ending Friday is INR 9.63 trillion.

Traders expect the surplus liquidity to widen next week on inflows from the RBI's cut in cash reserve ratio. The reduction in cash reserve ratio, which will be carried out in four equal tranches with effect from the fortnights beginning Saturday is expected to infuse total liquidity to the tune of INR 2.5 trillion into the banking system. From the first tranche, traders expect around INR 600 billion of liquidity to be released into the banking system.  (Muskan Lodhi) 

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

Edited by Akul Nishant Akhoury

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