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Informist, Tuesday, Sept. 16, 2025

By Shravani Chandiwade

MUMBAI – The one-day interbank call money rate Tuesday ended at the Reserve Bank of India's repo rate of 5.50% on likely demand for funds from a single borrower towards close of the day, dealers said. The triparty repo rate ended near the repo rate as banks tapped the market to borrow funds ahead of Goods and Services Tax outflows, which will likely commence from Saturday, they said.

The one-day call money rate ended at 5.50%, sharply up from its previous close of 4.95%. The weighted average call rate was 5.43%, slightly lower than 5.44% Monday. Total volume traded in the call money market was INR 215.46 billion Tuesday, marginally lower than INR 218.49 billion Monday. The call rate moved in a band of 4.75–5.50% during the day.

"Call money market activity has slowed since last week amid surplus liquidity in the banking system, and with the (Jul-Sept) quarter-end approaching, banks are refraining from aggressive lending," a dealer at a state-owned bank said.

The triparty repo rate ended at 5.40%. The weighted average triparty repo rate ended at 5.37%, slightly up from the weighted average triparty rate of 5.32% Monday. Trades in the triparty repo market were higher at INR 4.50 trillion compared with INR 3.92 trillion Monday. Banks were seen borrowing funds actively during variable rate repo auction due to lower borrowing costs in the tri-party repo market, which was at 5.41% compared with the minimum bid of 5.51% at the auction.

"With borrowing costs in TREPs at 5.41%, banks turned to the triparty repo market to borrow funds at more favorable rates as they will further uptick later in the week ahead of the upcoming GST outflows," a dealer at another state-owned bank said.

The central bank held a three-day variable rate repo auction of INR 750.00 billion Tuesday which was poorly subscribed at just INR 5.85 billion at the cut-off of 5.51%. Traders viewed this auction as unnecessary with the current liquidity surplus in the banking system seen manageable after the first tranche of cash reserve ratio cut infused around INR 700 billion of liquidity into the banking system on Sept. 6.

As per latest data, the central bank net absorbed INR 1.90 trillion from the banking system on Monday, down from INR 2.66 trillion Sunday. Meanwhile, banks slightly reduced their cash reserves with the central bank to INR 9.11 trillion similar to that on Sunday. The daily average cash reserve requirement for the fortnight ending Sept. 19 is INR 9.04 trillion.

Traders expect another variable rate repo auction on Friday ahead of the GST payouts. These outflows will likely drain INR 1.5 trillion to INR 2 trillion from the banking system, they said.

OUTLOOK

* On Wednesday, the one-day call money rate is likely to open below the RBI's repo rate on comfortable liquidity surplus.

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

CALL RATE

5.50%--Tuesday's close for one-day loans
5.45%--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:

India Call: Near RBI's repo rate as liquidity dips after advance tax payouts

MUMBAI – The one-day interbank call money rate opened near the Reserve Bank of India's repo rate of 5.50% as a proxy for the banking system liquidity surplus fell below INR 2 trillion Monday, dealers said. The rates in the call money market are expected to cool off after the central bank's variable rate repo auction worth INR 750 billion Tuesday and also because there are no major outflows scheduled for the day. 

At 0949 IST, the one-day interbank call money market rate was 5.50%, with a weighted average rate of 5.49%. The rate in the tri-party repo market was 5.40% same as the weighted average rate. Trade volumes in the call market were around INR 83.44 billion at 0930 IST, compared with INR 65.99 billion at the same time Monday.

Besides the outflow for gilt payments of INR 280 billion Monday, advance tax payouts of nearly INR 500 billion also led to a crunch in systemic liquidity surplus, dealers said. As per latest data from the RBI, the central bank net absorbed INR 1.90 trillion from the banking system Monday, sharply lower than INR 2.66 trillion Sunday. Meanwhile, banks kept their cash reserves with the central bank at INR 9.11 trillion, similar to Sunday. The daily average cash reserve requirement for the fortnight ending Sept. 19 is INR 9.04 trillion.

Call money rates may cool off later in the day with INR 94.25 billion of scheduled inflows hitting the market, but the triparty repo rate may remain steady below the repo rate on firm demands for funds from banks, dealers said. Banks may choose to meet their funding needs using the money markets after bidding for only INR 5.25 billion at the INR-750-billion, three-day variable rate repo auction. "This VRR was surprising as the market was expecting VRRR after the central bank's reversal of three-day VRRR worth INR 1.5 trillion on Monday," a dealer at a private sector bank said.

Outflows due to goods and services tax payments are also expected to begin later this week, which could have a bearing on liquidity, dealers said. "We expect it (goods and services tax payments) to commence on Sept. 20 and the expected quantum is around INR 1.8 trillion," a dealer at a public-sector bank said. (Muskan Lodhi) 

End

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

Edited by Ashish Shirke

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