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Informist, Tuesday, Oct. 7, 2025

 

MUMBAI – The interbank call money rate ended below the standing deposit facility rate of 5.25?cause of the liquidity surplus in the banking system and a lack of scheduled outflows. The weighted average triparty repo rate was 5.24%, just below the lower bound of the Liquidity Adjustment Facility corridor, as the Reserve Bank of India did not conduct a variable rate reverse repo operation, dealers said.

 

On Tuesday, the one-day call rate ended at 5.00%, with a weighted average of 5.35%, both rates unchanged from Monday. The total volume in the call money market was lower than usual, at INR 134.05 billion, but similar to the level on Monday.

 

On Monday, the RBI absorbed INR 1.59 trillion worth of liquidity from the banking system, a proxy for systemic liquidity surplus, down from INR 1.75 trillion the previous day. Dealers said that the slight decline in liquidity surplus was due to the outflows on Monday for the settlement of the gilt auction. 

 

Banks were holding more cash than required with the central bank after the cash reserve ratio cut came into effect Saturday, which freed up INR 669 billion of durable liquidity starting this fortnight. This will be reflected in the liquidity surplus over the week as banks begin to reduce the reserves, dealers said. 

 

Banks are unlikely to tap overnight money markets except in a crunch, as tax outflows for excise and tax deducted at source take place. Some traders also expect the RBI to pull overnight money market rates closer to the repo rate by announcing a VRRR auction.

 

OUTLOOK

* The one-day call rate may open below the RBI's repo rate due to a significant liquidity surplus, especially with the central bank avoiding the announcement of any VRRR operations to drain short-term liquidity.

 

* During the day, the one-day call money rate is seen in the range of 4.75-5.45%, dealers said.

 

CALL RATE

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

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

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

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.39	5.39
3-day	--	--
14-day	5.78	5.79
1-month	5.93	5.94
3-month	6.10	6.10

 

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India Call: Below RBI's repo on lack of early demand for funds

 

MUMBAI – The one-day interbank call money rate was below the Reserve Bank of India's repo rate of 5.50% Tuesday due to lack of demand for funds in the early trade, dealers said. Banks refrained from borrowing funds aggressively as the surplus liquidity in the banking system was seen comfortable, especially because of the 25-basis-point cut in the cash reserve ratio. 

 

The one-day call rate was at 5.30% at 1021 IST, with the weighted average call rate at 5.40%. Monday, the one-day call rate closed at 5.00%. Total volumes in the call market was INR 75.59 billion lower than INR 91.17 billion at 1035 IST Monday. 

 

The RBI absorbed INR 1.59 trillion worth of liquidity from the banking system Monday, which is a proxy for systemic liquidity surplus, lower than INR 1.75 trillion on Sunday. Dealers said that the slight fall in liquidity surplus was due to the outflows owing to settlement for gilt auction Monday. 

 

Banks were holding more cash than required with the central bank after the cash reserve ratio cut came into effect Saturday, which freed up around INR 700 billion of durable liquidity. This will be reflected in the liquidity surplus over the week as banks begin to bring down the reserves that provide no yield, dealers said. 

 

Some dealers expect money market rates to rise near the repo rate Tuesday as demand from mutual funds could come later in the day. "There are two IPO listings today so some demand may come because of that," a dealer at a state-owned bank said. "But overall rates should be suported."

 

Banks are unlikely to tap overnight money markets except in a crunch as tax outflows for excise and tax deducted from source take place beginning Tuesday. Traders expect around INR 200 billion to INR 300 billion worth of drain in liqudity due to the the tax outflows. However, rates in the money market may not rise significantly, as liquidity in the system was still seen comfortable, dealers said. 

 

The triparty repo rate was at 5.25% while its weighted average rate was at 5.24%. Total volumes traded in the TREPs market was INR 1.94 billion at 1021 IST.  (Srijita Bose)  End

 

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

 

Reported by Aaryan Khanna

Edited by Saji George Titus

 

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