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Informist, Friday, Oct. 24, 2025

By Kabir Sharma

MUMBAI – The interbank call money rate ended near the Reserve Bank of India's marginal standing facility rate on Friday as demand for funds from primary dealers pushed rates higher, dealers said. "I think liquidity problem is also there with them (foreign PDs) because they came to us to borrow," a dealer at a state-owned bank said. "Tight liquidity liquidity conditions are there for them."

The three-day call rate ended at 5.72% on Friday, up sharply from Thursday's one-day rate of 5.00%. The weighted average call rate was 5.58%, up from 5.46% Thursday. The rate in the triparty repo segment ended at 5.75%. The weighted average triparty repo rate surged to 5.52% Friday from 5.27% Thursday. The rates surged on demand for funds, however, at the variable rate repo auction held earlier on Friday, the Reserve Bank of India recived bids only for INR 307.50 billion against the notified amount of INR 1.25 trillion. 

"Initially people were thinking that TREPS (tri-party repo rate) will be down like yesterday so they didn't borrow at (VRR) auction. But if you see most of the volumes in TREPS were done in the first few hours of trade," a dealer at a state-owned bank said. "Primary dealers had some cash crunch so rates rose."

As per the RBI's latest data, the central bank's net injection into the banking system--a proxy for systemic liquidity deficit--stood at INR 26.46 billion Thursday, significantly lower from INR 523.00 billion Wednesday. Inflows due to redemption and coupon payments of treasury bills and state bonds helped in lowering the deficit liqudity. Meanwhile, traders increased the cash parked with the RBI at the standing deposit facility rate to INR 1.60 trilion Thursday from INR 1.19 trillion Wednesday. 

There were no other major outflows during the day, dealers said. Moreover, towards the begining of the next week, inflows due to the government's month-end spending on salaries and pensions are poised to begin, which will help bring liquidity back to a surplus, delaers said. However, some demand for funds ahead of the weekend could limit the fall in rates, they said.

The RBI will hold an overnight variable rate repo auction for INR 1.00 trillion on Monday, which is expected to help ease liquidity further, dealers said. 

OUTLOOK

Monday, the one-day call money rate may open near the RBI's repo rate owing to tight systemic liquidity, dealers said. During the day, the rate is seen in the range of 4.90-5.70%, dealers said. Money market rates could ease after the RBI conducts a variable rate repo auction of INR 1.00 trillion at 0930-1000 IST. The reversal of the three-day variable rate repo auction held Friday will drain INR 307.50 billion of liquidity.

CALL RATE

5.72%--Friday's close for three-day loans

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

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

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

End

India Call: Near RBI's repo rate on early demand for funds

By Srijita Bose 

MUMBAI – The interbank call money rate hovered around the Reserve Bank of India's repo rate of 5.50% due to early demand for funds and as liquidity in the banking system continued to remain in a deficit, dealers said. Money market rates are expected to cool down after the RBI's variable rate repo auction and due to availability of cash amid lower rates in the broader triparty repo segment, they said. 

The three-day call rate was at 5.50% at 0954 IST, against the close of 5.00% for one-day loans Thursday. The weighted average call rate was at 5.53%, against 5.46% Thursday. Meanwhile, the triparty repo rate was at 5.41%, with the weighted average at 5.27%. The total volume in the call market at 0930 IST was INR 23.90 billion, lower than INR 27.04 billion at the same time Thursday. 

Rates in the call market were around the repo rate due to demand for the reversal of VRR auctions that will drain INR 1.51 trillion of liquidity out of the system, dealers said. Despite this, market participants only borrowed INR 307.50 at the INR 1.25 trillion three-day VRR auction held on Friday, as traders chose to borrow in the triparty segment where rates were below the repo rate, dealers said. 

"I think rates will come down later in the day, there are significantly more lenders than borrowers in TREPS," a dealer at a state-owned bank said. "Due to the festive season the currency in circulation has also improved. So though the system liquidity is still in deficit, there is not a lot of cash crunch right now." 

As per the RBI's latest data, the central bank's net injection into the banking system – a proxy for systemic liquidity deficit – stood at INR 26.46 billion Thursday, significantly lower from INR 523.00 billion Wednesday. Inflows due to redemption and coupon payments of treasury bills and state bonds helped in lowering the deficit liqudity. Meanwhile, traders increased the cash parked with the RBI at the standing deposit facility rate to INR 1.60 trilion Thursday from INR 1.19 trillion Wednesday. 

Outflows owing to payments for goods and service tax were over and there were no major outflow scheduled for the day, dealers said. This could also help drag down money market rates later in the day, they said. Moreover, towards the begining of next week, inflows due to the government's month-end spending on salaries and pensions are poised to begin, which will help bring liquidity back to a surplus, delaers said. However, some demand for funds ahead of the weekend could limit the fall in rates, they said.  End

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

Edited by Akul Nishant Akhoury

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