More Stories

Informist, Tuesday, Sept. 23, 2025

By Shravani Chandiwade

MUMBAI – The one-day interbank call money rate ended below the Standing Deposit Facility rate of 5.25% Tuesday as the Reserve Bank of India infused INR 1.41 trillion into the banking system through two overnight variable rate repo auctions. The triparty repo rate ended sharply lower than Monday, as banks were not active in the market, dealers said.

The one-day call money rate ended at 4.95% on Tuesday, down sharply from its previous close of 5.74%. The weighted average call rate ended at 5.59%, a tad up from 5.58% on Monday. On Tuesday, the call rate moved in a range of 4.75-5.70%. The total volume traded in the call market was INR 186.07 billion.

The call rate opened above the RBI's repo rate as banks actively borrowed due to the liquidity deficit in the banking system. As per the latest data from the Reserve Bank of India, the central bank infused INR 319.87 billion into the banking system Monday. An infusion by the RBI represents a liquidity deficit, while an absorption represents a surplus. The liquidity in the system became deficit mainly due to outflows for payments of goods and services tax.

The central bank conducted two overnight variable-rate repo auctions to ease the pressure on systemic liquidity. The central bank accepted the full notified amount of INR 1.00 trillion at its first auction and took bids worth INR 405.10 billion in the second variable rate repo auction.

"Banks did not take the risk of relying fully on TREPs (triparty repo) for funds, considering what happened on Monday. They decided to borrow cautiously. Therefore, the first auction was fully subscribed, with the second one (auction) receiving moderate bids," a dealer at a state-owned bank said.

The triparty repo rate settled at 5.30%, sharply down from 6.00% on Monday. The weighted average rate in the triparty repo market ended at 5.41%, down from its previous close of 5.54%. The triparty repo rate moved in a band of 5.00-5.58%. The total volume in the triparty repo market was INR 4.36 trillion.

Banks borrowed funds from the central bank's variable-rate repo auctions window, with their participation in the triparty repo market being less active compared to Monday. Mutual funds, which are large lenders in the triparty repo market, were seen as active on the lending front. However, due to subdued demand for funds from banks, the rates in the triparty repo market remained mostly below the repo rate, they said.

Post the market hours, the central bank announced an overnight variable rate repo auction of INR 1.50 trillion on Wednesday, in line with expectations. The auction will take place from 0930 IST to 1000 IST. Tuesday's two variable-rate repo auctions are due for reversal on Wednesday. 

OUTLOOK

* On Wednesday, the one-day call money rate is likely to open near the RBI's repo rate due to demand for funds and ahead of the VRR auction. 

* Later in the day, rates may cool down as the RBI will conduct an overnight variable rate repo auction for INR 1.50 trillion at 0930-1000 IST.

* During the day, the call rate is seen in a range of 4.80-5.80%, dealers said.

CALL RATE

4.95%--Tuesday's close for one-day loans

5.70%-Tuesday's open for one-day loans

5.74%--Monday's close for one-day loans

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Above RBI's repo rate as banking liquidity turns to deficit

MUMBAI – The one-day interbank call money rate opened at 5.70% Tuesday, just off the 5.74% closing Monday, on firm demand for funds from banks after the outflows for goods and services tax exceeded traders' views, dealers said. The rate is expected to stay above the Reserve Bank of India's repo rate of 5.50% unless the central bank infuses adequate liquidity through its overnight variable rate repo auction of INR 1.00 trillion.

Monday, the central bank had net infused INR 319.87 billion into the banking system, a first since Mar. 28, and a reversal from the net absorption of INR 70.72 billion Sunday. 

At 0926 IST, the one-day interbank call money market rate was 5.70% and the weighted average was the same. The rate in the tri-party repo market was 5.54% and the weighted average was 5.53%. Trade volume in the call market was around INR 62.52 billion at 0930 IST, compared with INR 2.66 billion at the same time Monday. Call money rates are expected to stay elevated during the day due to low supply as even large banks are seen borrowing, dealers said. In the TREPs market, rates may rise to the RBI's Marginal Standing Facility rate of 5.75% if the central bank does not infuse enough liquidity, they said.

Some traders expect the INR 1.00-trillion VRR auction to be fully subscribed as call money rates and TREPs rates had already risen above the central bank's repo rate of 5.50% before the auction. The subscription amount at the auction is seen at INR 950 billion and the cut-off rate at 5.51%, according to the average estimate of nine market participants polled by Informist. 

"Traders will likely borrow aggressively at the auction today because yesterday the call money and TREPs rates jumped and borrowers still had to borrow at such high rates," a dealer at state-owned bank said. "They (traders) don't want the same thing to happen today as well," the dealer said. Monday, the TREPS rate had closed at 6.00%, significantly higher than the RBI's 5.75% MSF rate.

Some traders also expect another overnight variable-rate repo auction of INR 500 billion to INR 1 trillion later in the day as liquidity has turned deficit for the first time in 2025-26 (Apr-Mar). Monday, outflows for goods and services tax are likely to have drained more than INR 2 trillion from the banking system, against traders' expectations of INR 1.8 trillion to INR 2 trillion, dealers said. 

Banks maintained INR 8.80 trillion cash balances with the RBI on Monday, slightly lower than INR 9.00 trillion Sunday. The daily average cash reserve requirement for the fortnight ending Oct. 19 is INR 9.13 trillion. (Muskan Lodhi)

End

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

Edited by Saji George Titus

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000  

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.