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Informist, Friday, Sept. 12, 2025

 

By Shravani Chandiwade

 

MUMBAI – The three-day interbank call money market ended sharply below the Standing Deposit Facility rate of 5.25% on Friday due to muted demand from banks for funds and the reversal of variable rate reverse repo auctions of varied tenures, cumulatively releasing INR 1.70 trillion into the banking system Friday. "This whole week, banks stayed on the sidelines having ample liquidity surplus and lack of exceptional outflows," a dealer at a private sector bank said. 

 

As per the latest data from the Reserve Bank of India, the central bank net absorbed INR 2.85 trillion Thursday, higher than INR 2.62 trillion Wednesday. Banks also reduced their cash reserves with the RBI to INR 8.90 trillion Thursday from INR 8.96 trillion Wednesday. 

 

The three-day call money rate ended at 4.95% on Friday, down from 5.00% for one-day loans Thursday. The weighted average call rate was at 5.43%, up from 5.35% the previous day. Total volume traded in the call money market was at INR 194.14 billion Friday, down from INR 219.01 billion Thursday. The call rate moved in a range of 4.75–5.50% on Friday.

 

"With quarter-end approaching, banks are trading cautiously and refraining from active borrowing or lending," a dealer at a private sector bank said. "During this period, banks aim to manage their finances conservatively and hence hold liquidity."

 

The triparty repo market ended at 5.35% Friday, up from 5.12% on Thursday. "Rates in the TREPs (triparty repo) inched up during the day as few banks were seen borrowing in the market after parking funds under VRRR (variable rate reverse repo) auction," a dealer at a private sector bank said. The weighted average triparty rate was at 5.35%. The total trades in the tri-party repo market stood at INR 4.00 trillion Friday.

 

The three-day variable rate reverse repo auction of INR 1.50 trillion was fully subscribed at a cut-off of 5.49%. The auction was fully subscribed, mainly because the tenure is for three days and will reverse on Monday. Moreover, on the same day, payout of advance tax payments is expected to commence, and the reversal will cushion the drain caused by the outflows. Traders expect advance tax payments to drain around INR 500 billion worth of liquidity from the system on Monday.

 

OUTLOOK

* The call market is shut on Saturday. On Monday, the one-day call money rate is likely to open near the RBI's repo rate of 5.50% ahead of advance tax outflows.

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

 

CALL RATE

4.95%--Friday's close for three-day loans
5.50%--Friday's open for three-day loans
5.00%--Thursday's close for one-day loans

 

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	Friday	Thursday
Overnight	5.47	5.39
3-day	--	--
14-day	5.74	5.73
1-month	5.95	5.94
3-month	6.10	6.09

---

India Call: At RBI's repo rate on demand due to 3-day VRRR auction

 

MUMBAI – The three-day interbank call money rate was at the Reserve Bank of India's repo rate of 5.50% due to demand ahead of a three-day variable rate reverse repo auction of INR 1.5 trillion, dealers said. However, rates did not shoot up above the repo rate due to ample liquidity in the banking system, they said 

 

At 1025 IST, the three-day interbank call money market rate was 5.50%, with the weighted average level also at the same level. The rate in the tri-party repo market was 5.36% with the same weighted average rate. Trade volumes in the call market were around INR 51.38 billion at 0935 IST, compared with INR 58.12 billion at the same time Thursday.

 

Friday, the central bank will release INR 1.7 trillion into the banking system as part of the reversal of two variable rate reverse repo auctions of varied tenures, aiding systematic liquidity. As per latest data from RBI, the central bank net absorbed INR 2.85 trillion from the banking system Thursday, higher than INR 2.62 trillion Wednesday. Meanwhile, banks reduced their cash reserves with the central bank to INR 8.90 trillion Thursday from INR 8.96 trillion Wednesday. The daily average cash reserve requirement for the fortnight ending Sept. 19 is INR 9.04 trillion. 

 

Rates in the call money market are expected to cool during the day due to a rise in liquidity surplus, dealers said. Others said rates may remain higher during the day. "The market will sit on a bit of a crunch due to credit optics and hardening of G-sec (government bond) yields," a dealer at a public sector bank said.

 

Outflows due to advance tax payments are expected to begin Sept. 15, which are likely to drain out around INR 500 billion worth of liquidity from the system, according to dealers. This may also lead some traders to borrow in the market before the weekend, and this could limit the fall in rates, dealers said. Outflows due to goods and services tax payments are also expected to begin later in the month, which could have a bearing on liquidity. (Muskan Lodhi)

 

End

 

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

 

Edited by Saji George Titus

 

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