More Stories

Informist, Monday, Nov. 3, 2025

 

By Aaryan Khanna

 

NEW DELHI – The interbank call money rate ended below the Standing Deposit Facility rate of 5.25% due to easier liquidity conditions in the banking system after a week of tightness, dealers said. The government's month-end spending and the third tranche of the cash reserve cut by the Reserve Bank of India both eased the pressure on money market rates substantially, they said.

 

The one-day call rate ended at 5.00%, the same as the closing rate for two-day loans Saturday. The weighted average call rate Monday was 5.42%, up from 5.12% Saturday though the numbers are incomparable due to the minuscule volumes usual of weekend, dealers said. The weighted average rate, which is the operating target of monetary policy, was 5.66% Friday and had been above the repo rate of 5.50% through the past week.

 

The central bank's net absorption from the banking system--a proxy for liquidity surplus--was INR 1.11 trillion Sunday. The liquidity surplus has been above the INR 1 trillion mark since Friday due to the government's month-end inflows for salaries and pension payments, dealers said. Additionally, a cut in the cash reserve ratio to 3.25% of net demand and time liabilities of banks came into effect Saturday and freed up INR 700 billion of liquidity.

 

"The situation was really under control today (Monday) because of the government spending and the CRR (cash reserve ratio) cut," a dealer at a state-owned bank said. "Now the risk is that the RBI brings in a VRRR (variable rate reverse repo operation), because the (weighted average) TREPS (triparty repo rate) went straight to 5.20%." On Friday, the weighted average rate in the larger triparty repo market, which includes mutual funds, was 5.58%.

 

Bankers said the inflows from the government likely continued Monday, but liquidity will fall during the rest of the week. The RBI's dollar sales to protect the domestic currency is leading to a continuous reduction in rupee liquidity in the banking system, though the central bank's forward dollar sales are offsetting the impact, dealers said. The outflows from excise tax and tax-deducted-at-source payments will also be processed by Friday, they said.

 

Some banks and mutual funds may also have funds tied up in initial public offerings through the week, which may prevent them from lending in the money markets and keep the weighted average call rate anchored near the policy repo rate, dealers said. Marquee public issuances this week include Lenskart Solutions and the parent of investment platform Groww.

 

OUTLOOK

On Tuesday, the two-day call money rate may open near the RBI's repo rate due to early demand for funds from primary dealerships, dealers said. Money markets are shut Wednesday for Guru Nanak Jayanti. Some traders expect the central bank to conduct a variable rate reverse repo auction for an amount up to INR 500 billion if weighted average money market rates move to the SDF rate of 5.25%

 

During the day, the call money rate is seen in the range of 4.90-5.60%, dealers said. Activity of banks and mutual funds in initial public offerings may lead to some volatility in money market rates, dealers said.

 

CALL RATE

5.00-Monday's close for one-day loans

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

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

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.49	5.69
3-day	--	--
14-day	5.84	5.85
1-month	5.92	5.96
3-month	6.11	6.12

---

India Call: Above RBI's repo rate on early demand; liquidity surplus rises

 

MUMBAI – The interbank call money rate was above the Reserve Bank of India's repo rate due to early demand for funds, dealers said. Rates are expected to cool during the day as the liquidity surplus in the system improved owing to the government's payments of salaries and pension, they said. 

 

At 0955 IST, the one-day call rate was at 5.55%, with the weighted average rate at 5.50%, against a close of 5.00% for two-day loans Saturday. The triparty repo rate was 5.26% at the same time, with the weighted average rate of 5.28%. 

 

The central bank's net absorption from the banking system--a proxy for liquidity surplus--was INR 1.23 trillion Friday, against INR 84.76 billion Thursday. Liquidity surplus in the system improved above the INR 1 trillion mark due to the government's month-end inflows, dealers said. Additionally, a cut in the cash reserve ratio to 3.25% of net demand and time liabilities of banks, came into effect Saturday, which is also said to infuse INR 700 billion of liquidity into the system. 

 

In early trade, the call rate hovered around the repo rate due to demand from primary dealers and some banks before the settlement of gilt auction held Friday. Around INR 210 billion will be used for settlement of the gilt auction. The call rate is expected to ease later in the day as there are no other major scheduled outflows during the day, dealers said. 

 

"Liquidity has improved, so rates will remain in this zone. Some banks may still have some crunch but overall in the system level, certainty we are doing better and rates should fall," a dealer at a state-owned bank said. "Some IPOs (initial public offerings) are there, but there is no significant outflows this week."

 

Some dealers expect robust demand for funds as market participants bid for initial public offerings. This could limit the fall in money market rates during the day, they said.  (Srijita Bose)

 

End

 

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

 

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.