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Informist, Saturday, Oct. 18, 2025

By Srijita Bose

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility of 5.25% on Saturday. As is usual on Saturdays, traded volume in the call market was low. However, rates in the triparty repo segment, where mutual funds are the major lenders, ended above the repo rate as smaller banks and non-banking financial companies borrowed funds due to rise in credit offtake for Diwali.

The two-day call rate closed at 5.24%, lower than 5.50% for three-day loans on Friday. The weighted average call rate was 5.06%, sharply lower than 5.59% on Friday. The call rate moved in a range of 4.90-5.50%. Total volumes in the call money market was INR 13.80 billion, down from INR 177.33 billion Friday. The volume was low as several dealers are said to be on extended holiday, as RBI-administered markets are shut on Tuesday and Wednesday for Diwali.

The TREPs rate ended at 5.51%, lower than 5.75% Friday. The weighted average TREPs rate was 5.52%, little changed from 5.53% Friday. Total volume in the triparty repo segment was INR 102.49 billion, against INR 4.02 trillion Friday.

Outflows or cash withdrawals of up to INR 350 billion are also expected for Diwali, as consumer spending is seen up following cut in goods and service tax rates, dealers said. Corporates withdrew money for festive requirements while loan disbursement also picked up Saturday, dealers said.

"There were some people who were not able to borrow in 3-day call yesterday so they had borrowed in overnight (call). Today they would have squared-off those positions and borrowed in the 2-day call instead," a dealer at a state-owned bank said. "There is also good expectation of credit uptick and mutual funds are also not lending much so rates went up."

Some market participants also likely borrowed Saturday on the view that money market rates could remain firm as GST payments could drain liquidity. The surplus liquidity in the banking system, as measured by the RBI's net liquidity absorbed, was INR 1.41 trillion Thursday, up from INR 1.30 trillion Wednesday.

Some banks had started small quantum of payments for goods and services tax, since the RBI is shut on Oct. 21, the day the outflows usually start every month. Dealers expect the total outflows owing to GST payments to be around INR 1.7 trillion, slightly lower than the usual INR 1.8 trillion to INR 2.0 trillion due to cut in GST rates. On Sept. 3, the GST Council overhauled the indirect tax regime as part of next-generation reforms by reducing the four-slab GST structure of 5%, 12%, 18%, and 28% to a two-slab structure of 5% and 18%. The decision was implemented from Sept. 22. The council also introduced a new GST rate of 40% on sin and luxury goods.

OUTLOOK

* On Monday, the three-day call money rate may open near the RBI's repo rate owing to demand for funds as goods and services tax payment outflows are likely to drain system liquidity, dealers said. RBI-administered markets are shut on Tuesday and Wednesday for Diwali.

* During the day, the three-day call money rate is seen in the range of 4.90-5.70%, dealers said.

* On Monday, the RBI will conduct a four-day variable rate repo auction of INR 1.75 trillion at 0930-1000 IST. The reversal of the three-day variable rate repo auction of INR 27.50 billion held Friday is due Monday.

CALL RATE

5.24%--Saturday's close for two-day loans

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

5.50%--Friday's close for three-day loans

End

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

Edited by Ashish Shirke

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