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Informist, Thursday, Nov. 13, 2025

By Aaryan Khanna

NEW DELHI – The interbank call money rate ended near the Reserve Bank of India's Standing Deposit Facility rate of 5.25% as liquidity remained in a comfortable surplus, dealers said. The lack of a variable rate repo auction and significant outflows kept both the call and triparty repo rates below the policy repo rate of 5.50% through the day.

The one-day call rate ended at 5.30%, against Wednesday's close of 5.00%. The weighted average call rate was 5.33%, similar to 5.34% the past two days. The weighted average rate in the wider triparty repo market, which includes mutual funds, fell to 5.12% from 5.16% in the previous trading session.

The central bank's net absorption from the banking system--a proxy for liquidity surplus--was INR 2.10 trillion Wednesday, similar to Tuesday. There were no significant inflows or outflows Thursday. Some banks have been borrowing from the triparty repo market due to prevailing low rates and parked the funds at the RBI's SDF at 5.25%, earning an arbitrage, dealers said.

"Volumes have also picked up (in money markets) because people are getting cheap money to park with RBI, if they do that, they are getting good 5-10 basis points (profit)," a dealer at a foreign bank said.

Banks continued to maintain a daily shortfall in their cash balances parked with the RBI to meet statutory requirements as they had held an excess earlier in the fortnight and the average remained above the regulatory requirement, dealers said. Wednesday's holdings to maintain the cash reserve ratio of 3.25% of net demand and time liabilities were at INR 7.75 trillion against the INR 7.97 trillion average required for the fortnight. These holdings are likely to rise on Thursday and Friday, dealers said.

The central bank's speculated government bond purchases have been adding durable liquidity to the banking system over the past week, dealers said. The RBI is speculated to have bought nearly INR 300 billion of gilts in the secondary market, with 'Others' data showing net purchases worth INR 315 billion between Nov. 3 and Wednesday, according to the Clearing Corp. of India. Currently, these have not had a material impact on liquidity conditions and were instead seen as a move to cap gilt yields, dealers said.

Traders have been expected the RBI to announce a variable rate reverse repo auction over the past week as money market rates fell below the policy repo rate. The announcement of a three-day, INR 1-trillion VRRR auction Friday came after market hours.

OUTLOOK

On Friday, the three-day call money rate may near the repo rate of 5.50% after the RBI announced a long-awaited VRRR auction. Liquidity remains in a comfortable surplus and there are no significant outflows, and so the liquidity drain will only prop up the call money rate to near the repo rate, dealers said.

During the day, the call money rate is seen in the range of 4.90-5.50%, dealers said. Activity by banks and mutual funds in initial public offerings may lead to volatility in money-market rates.

CALL RATE

5.30%--Thursday's close for one-day loans

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

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

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Opens at 5.40% for third day amid ample surplus, lack of VRRR

MUMBAI – The one-day interbank call money rate opened at 5.40% for the third consecutive day as liquidity conditions remained largely static and as the Reserve Bank of India has not conducted a variable rate reverse repo auction so far this week, contrary to traders' expectations, dealers said. The central bank's net absorption from the banking system – a proxy for liquidity surplus – has been above INR 2.00 trillion since Nov. 4. 

Traders speculated that the central bank has been purchasing government bonds in the secondary market since Nov. 3, in a move seen pulling down bond yields while adding durable liquidity to the banking system, dealers said. If the central bank is purchasing gilts, it would not want to simultaneously drain transient liquidity through its liquidity management operations, dealers said. Since Nov. 3, the 'others' segment of gilt market participants — which includes insurance companies, provident funds and the RBI – has net bought gilts worth INR 315.10 billion, most of which is purchases by the RBI, traders speculate. Traders have been expecting the central bank to infuse durable liquidity into the banking system through open market operations, as the central bank's defence of the rupee in the foreign exchange market has put pressure on systemic liquidity.

"Rates are seen largely similar to Wednesday's range with no significant scheduled inflows or outflows for the day," a dealer at a state-owned bank said. "RBI could have come with the VRRR this week but now it is unlikely to come before this weekend as rates are likely to be on higher side due to reporting Friday," the dealer said. The dealer said the central bank has been infusing durable liquidty through its on-screen purchases in the secondary market. 

Rates are expected to fall during the day due to low demand for funds and liquidity at comfortable level, dealers said. However, demand for funds for fortnightly reporting Friday requirements may limit the fall in rates Thursday and Friday, dealers said. Scheduled commercial banks kept cash balances worth INR 7.75 trillion with the Reserve Bank of India Wednesday, against an average daily cash reserve requirement of INR 7.97 trillion for the fortnight ending Friday.

At 1011 IST, the one-day call rate was at 5.25%, with the weighted average rate at 5.40%, against a close of 5.00% for one-day loans on Wednesday. The weighted average rate on Wednesday was 5.34%. The triparty repo rate at the same time was 5.14%, with a weighted average rate of 5.17%. The weighted average triparty repo rate was 5.16% on Wednesday. The central bank's net absorption from the banking system – a proxy for liquidity surplus – was INR 2.10 trillion Wednesday, little changed from INR 2.11 trillion Tuesday. (Cassandra Carvalho and J. Navya Sruthi)  End

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

With inputs from Cassandra Carvalho

Edited by Akul Nishant Akhoury

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