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Informist, Saturday, Oct. 4, 2025

 

By Srijita Bose

 

MUMBAI – The two-day interbank call money rate ended lower than the Reserve Bank of India's Standing Deposit Facility of 5.25% on muted demand for funds, dealers said. An increase in liquidity surplus in the banking system also limited the rise in rates during the day. As is usual for a Saturday, volume in the call money market was thin. 

 

On Saturday, the two-day call rate closed at 5.00%, lower than the three-day close of 5.45% on Friday. The weighted average call rate was at 5.02%, sharply lower than 5.38% on Friday. Total volumes in the call money market was at INR 15.42 billion, against INR 168.96 billion Friday. 

 

Throughout the day, the call rate remained below the SDF rate as the liquidity in the banking system rose on account of a 25-basis-point cut in the cash reserve ratio, which came into effect Saturday. This was the second 25-bps cut in the CRR in the ongoing cycle of the 100 bps of cut announced in August, and brought down the CRR to 3.50%. The CRR cut on Saturday is expected to infuse INR 600 billion to INR 700 billion of durable liquidity into the system.

As per the latest data, the RBI Thursday net absorbed INR 1.77 trillion from the banking system, a proxy for systemic liquidity surplus, higher than INR 1.66 trillion on Wednesday. A major part of this was also aided by the government's salary and pension payments pegged to infuse nearly INR 1 trillion worth of liquidity into the system, market participants said. While a major part of the inflows due to the government's payments were over, dealers said some flows on Saturday were also on account of the same. 

 

"There was no demand today, and reporting Friday is also over so most people refrained from the market today," a dealer at a private sector bank said. "Some amount of outflows will come next week but the CRR cut has also come so rates will remain supported."

 

Meanwhile, rates in the triparty repo market also remained lower Saturday on account of the inflows. The TREPs rate ended at 4.25%, sharply lower than 5.23% Friday. The weighted average TREPs rate was at 5.10%, against 5.29% Friday. Total volume in the triparty repo segment was INR 111.87 billion, against INR 4.19 trillion Friday.

 

OUTLOOK

* On Monday, the one-day call money rate may open near the RBI's repo rate of 5.50% on early demand for funds from primary dealerships and banks. However, rates are seen easing during the day as liquidity in the system is expected to rise.

* During the day, the call rate is seen in a range of 4.70-5.50%, dealers said.

 

CALL RATE

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

4.95%--Saturday's open for two-day loans

5.45%--Friday's close for three-day loans

 

End

 

Edited by Deepshikha Bhardwaj

 

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