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Informist, Saturday, Sept. 6, 2025

By Kabir Sharma

MUMBAI – The three-day call rate ended below the Standing Deposit Facility rate on Saturday as volume in the market was low due to muted demand, dealers said. However, volume was more than usual for a Saturday as the shift in the Id-e-Milad holiday from Friday to Monday came as a surprise to the market, they said. "We were not prepared for it to be a working Friday, so there were some unexpected outflows which were covered today," a dealer at a state-owned bank said. 

The three-day call money rate settled at 5.00%, down from 5.10% for four-day loans Friday. The weighted average rate ended at 4.99%, down from 5.33% Friday. The rate in the triparty repo market closed at 5.30%, with the weighted average rate at 5.21%, down from 5.28% Friday.  

Trading volume in the call money market Friday was 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.

Dealers said rates in the money market were also lower on account of release of funds from the cash reserve ratio cut. The central bank will cut the CRR by 100 basis points to 3% of banks' net demand and time liabilities in four tranches starting Saturday, Governor Sanjay Malhotra had said in the June Monetary Policy Committee's outcome. These tranches will add liquidity of around INR 600 billion-INR 700 billion every four weeks until November-end.

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. 

OUTLOOK

* The market will be shut on Monday. On Tuesday, the one-day call money rate is likely to open below the RBI's repo rate of 5.50% on low funding needs. 

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

CALL RATE

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

5.00%--Saturday's open for three-day loans

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

End

Edited by Avishek Dutta

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