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Informist, Wednesday, Oct. 8, 2025

 

By Kabir Sharma and Vaishali Tyagi

 

NEW DELHI – The interbank call money rate ended below the standing deposit facility rate of 5.25?cause of comfortable liquidity surplus in the banking system amidst muted demand for funds from banks, dealers said. Dealers said there may be one or two odd deals where rates may be on the higher side, but overall condition remains fairly manageable. In the more active triparty repo market, rates remained largely unchanged with the weighted average rate ending at 5.27% Wednesday compared with 5.24% Tuesday. The volume in the triparty repo market was INR 4.14 trillion on Wednesday.  

 

"There are lot of funds blocked for IPOs (initial public offerings), but they remain within the system so there is no liquidity pressure," a dealer at a state-owned bank said. "Sometimes the rates may increase in a spike as some banks get concentrated level of funds, but on a weighted average level there is no concern."

 

On Wednesday, the one-day call rate ended at 4.95% against Tuesday'c close of 5.00%. The weighted average call rate ended at 5.34%, a basis point lower than Tuesday. The total volume in the call money market was a little higher than Tuesday, at INR 154.71 billion. 

 

On Tuesday, the Reserve Bank of India net absorbed INR 1.48 trillion worth of liquidity from the banking system, a proxy for systemic liquidity surplus. This was lower than INR 1.59 trillion on 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.

 

Dealers said there were outflows from the banking system to the tune of INR 500 billion to INR 600 billion since Tuesday on account of excise duty and tax deducted at source payments. However, liquidity conditions remained comfortable after the RBI's cash reserve ratio cut, they said, as it offset the outflows for tax payments and the auction payment settlement on Monday. 

 

Dealers said as long as the RBI doesn't conduct large variable rate reverse repo auctions, the call rate will remain in 5.30-5.40% range. Post market hours, the RBI announced a VRRR auction for INR 500 billion at 0930-1000 IST on Thursday.  

 

OUTLOOK

* The one-day call rate may open below the RBI's repo rate on Thursday due to a significant liquidity surplus in the banking system.

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

 

CALL RATE

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

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

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

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.40	5.39
3-day	--	--
14-day	5.79	5.78
1-month	5.96	5.93
3-month	6.10	6.10

---

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

 

MUMBAI – The one-day interbank call money rate was below the Reserve Bank of India's repo rate due to muted demand for funds, dealers said. Market participants had sufficient cash reserves with them and refrained from borrowing in the call market, they said. 

 

The one-day interbank call money rate was at 5.35% at 0943 IST, and the weighted average rate was 5.40%. Total volume in the call moeny market was INR 55.01 billion at 0930 IST, almost similar to INR 55.47 billion at the same time Tuesday.

 

Volumes in the call money market fell as banks refrained from borrowing funds aggressively as surplus liquidity in the banking system remained comfortable, especially because of the 25-basis-point cut in the cash reserve ratio which took effect on Saturday. 

 

Traders expect outflows of around INR 250 billion to INR 400 billion due to excise and tax deducted at source. However, these outflows are not expected to shoot up money market rates, dealers said. 

 

On Tuesday, the RBI absorbed INR 1.48 trillion worth of liquidity from the banking system, a proxy for systemic liquidity surplus. This was lower than INR 1.59 trillion on 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 rates to rise slightly later in the day on demand from banks and mutual funds to invest in initial public offerings of companies. "Today is the last listing for Tata Capital, so institutional buyers could come and tap the market," a dealer at a state-owned bank said. "So around 1400 IST, we can see rates go up somewhat, but the rise will not be much since no one is in a cash crunch right now."

 

The triparty repo rate was 5.26% and its weighted average rate was 5.25%. Total volumes traded in the TREPs market was INR 1.59 trillion at 0958 IST. 

(Srijita Bose)

 

End

 

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

 

Edited by Tanima Banerjee

 

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