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Informist, Tuesday, Sept. 9, 2025

By Shravani Chandiwade

MUMBAI – The one-day call rate ended below the Standing Deposit Facility rate of 5.25% Tuesday due to low demand for funds and comfortable liquidity surplus, dealers said. Lack of significant outflows this week also kept rates steady throughout the day.

The one-day call money market rate ended at 5.00% Tuesday. The call rate opened slightly higher due to firm demand for funds from primary dealerships early in the day, dealers said. However, for the majority of the trading session, the call rate remained below the Reserve Bank of India's repo rate of 5.50%. It moved within a band of 4.75-5.45%.

Consequently, the weighted average call rate ended at 5.35% Tuesday, sharply higher than 4.99% Friday. "Given the market conditions, banks have comfortable liquidity. Hence, the call rate fell below the RBI's repo rate further in the day," a dealer at a private sector bank said.

As per  RBI's latest data, the central bank net absorbed INR 2.36 trillion, down from INR 2.53 trillion on Sunday. Reduction in the liquidity surplus was due to outflows for excise duty and tax, which commenced on Sunday and will continue till Sept. 15. Traders see no significant impact of this outflow on the liquidity in the banking system as it remained comfortable due to INR 600 billion to INR 700 billion of inflows expected from the RBI's cut in cash reserve ratio which came in effect on Saturday, they said.

The triparty repo market ended at 5.20% Tuesday. The weighted average triparty repo rate ended at 5.28%, up from 5.21% Saturday. The total volume traded in the tri-party repo market was INR 4.30 trillion. "Rates in the TREPs (triparty repo) were steady as there were ample particpants on both lending and the borrowing front," a dealer at private sector bank said.

OUTLOOK

* On Wednesday, the one-day call money rate is likely to open below the RBI's repo rate of 5.50% on low funding needs and lack of significant outflows. 

* During the day, the call rate is seen in the range of 4.75-5.50%, dealers said.

CALL RATE

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

5.40%--Tuesday's open for one-day loans

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

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Below RBI's repo rate on ample liquidity; no major outflows

MUMBAI – The interbank call money rate was below the Reserve Bank of India's repo rate of 5.50% Tuesday due to ample surplus liquidity in the banking system. The rates in the money market are seen falling during the day as there are no major outflows schedule and also due to inflows on redemption and coupon payment from state government bonds worth INR 133.36 billion, dealers said.

At 1004 IST, the one-day interbank call money market rate was 5.25% and the weighted average call rate was at 5.40%. On Saturday, the three-day call rate ended at 5.00%. The rate in the tri-party repo market was 5.31% with the same weighted average rate. Trade volume in the call market was around INR 74.70 billion at 0930 IST. 

The rates in the call money market are seen falling due to lack of funding needs from the banks. The rates in the TREPs market are also likely to cool down during the day as more people are on the lending front in the market, dealers said. "The TREPs rate will fall to around 5.25% as there are 600 billion lenders against 320 billion borrrowers (at IST 0930)," a dealer at a private-sector bank said. 

As per latest data from RBI, the central bank net absorbed INR 2.88 trillion from the banking system Friday, similar to INR 2.87 trillion Thursday. Meanwhile, banks reduced their cash reserves with the central bank to INR 9.34 trillion Friday from INR 9.60 trillion Thursday. The daily average cash reserve requirement for the fortnight which ended Friday was INR 9.63 trillion.

Despite the outflows for excise duty and tax deducted at source, the net liquidity surplus in the system remained ample due to INR 600 billion to INR 700 billion worth of expected inflows from the RBI's cut in cash reserve ratio which began Saturday, according to dealers. The RBI cut the cash reserve ratio by 100 basis points to 3% of banks' net demand and time liabilities, Governor Sanjay Malhotra had said in the June Monetary Policy Committee's outcome. The reduction in cash reserve ratio, which will be carried out in four equal tranches, is expected to infuse liquidity to the tune of INR 2.5 trillion into the banking system.  End

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

Edited by Avishek Dutta

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