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Informist, Tuesday, Nov. 18, 2025

By Cassandra Carvalho

MUMBAI – The one-day call money rate ended below the Reserve Bank of India's standing deposit facility rate Tuesday on low demand for funds amid ample surplus liquidity, dealers said. Demand for funds for both credit disbursements and initial public offerings has eased over the past few sessions, and despite lenders having surplus liquidity, the number of borrowers is less, dealers said. 

Some traders said that several corporates and other borrowers were waiting for the Reserve Bank of India's Monetary Policy Committee to cut the repo rate by 25 basis points, most likely in December, before taking fresh loans. Some dealers expect inflows into banks within the next few business days as borrowers who expect a rate cut may pay back their current loans and take fresh loans after a rate cut in December. 

"People are expecting some credit inflows (into banks) because people are expecting a rate cut so they will repay their loans and take new ones at a cheaper rate after a rate cut," a dealer at a state-owned bank said.  

Demand for funds for initial public offerings has also dimmed as most subscribers at the offering have enough of a surplus, and the sizes of the recent IPOs have been on the lower side, dealers said. Arbitrage trades conducted by borrowing in the triparty repo market at a rate lower than SDF and parking it at SDF to receive a rate of 5.25% have reduced, as the weighted TREPS rate has risen closer to SDF, dealers said. The weighted average triparty repo rate ended at 5.20% Tuesday, from 5.12% on Nov. 13. 

"Not much borrowing is happening for IPOs, there are some IPOs ongoing and upcoming but whoever wants to participate has enough surplus," a dealer at another state-owned bank said. "Credit offtake has also fallen because some are expecting lower rates next month."

Wednesday onwards, focus will be on outflows for goods and services tax payments. Outflows to the tune of INR 1.7 trillion are expected, with some traders expecting over INR 2.00 trillion since the Centre's cut in the goods and services tax effective Sept. 22 has boosted consumption, dealers said. Due to the outflows, money market rates may be closer to repo than SDF, but dealers do not expect rates to rise above repo due to comfortable liquidity in the system. The central bank's net absorption from the banking system – a proxy for liquidity surplus – was INR 1.88 trillion Monday, slightly higher than INR 1.81 trillion Sunday. Till Friday, traders do not expect the RBI to conduct any variable rate reverse repo auction due to the GST payments. Some traders expect the RBI to conduct a three-day VRRR on Friday, but for a small quantum of INR 250 billion to INR 500 billion. 

The one-day call rate ended at 5.00%, against Monday's close of 4.95% for two-day loans. The weighted average call rate was 5.37%, largely unchanged from 5.36% Monday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.20% from 5.21% in the previous trading session.

OUTLOOK

* On Wednesday, the one-day call money rate may near the RBI's repo rate as outflows for GST payments are likely to start, dealers said. Expectations of a variable rate reverse repo auction announcement have reduced and any such announcement will be unexpected and thereby push up money market rates. 

* During the day, the one-day call money rate is seen in the range of 4.85-5.50%, dealers said. 

CALL RATE

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

5.45%--Tuesday's open for one-day loans

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

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near RBI's repo on early demand, surplus liquidity caps rates

MUMBAI – The one-day interbank call money rate was near the Reserve Bank of India's repo rate of 5.50% due to early demand for funds from private banks and primary dealerships, dealers said. However, during the day, call money rates are expected to trade around 5.35%, similar to those on Monday, amid comfortable liquidity in the banking system and lack of scheduled outflows, they said. 

At 1048 IST, the one-day call rate was at 5.25%, against 4.95% at the close Monday. The weighted average call rate was 5.45%, up from 5.36% Monday. The tri-party repo rate was at 5.18%, with a weighted average rate of 5.19%. The weighted average rate for the triparty repo market – which includes mutual funds – was 5.21% the previous day. 

"The rates opened near repo rate as some private banks and PDs (primary dealerships) are seen borrowing... There is also some requirement for (parking funds at) IPOs," a dealer at a private-sector bank said. "(The) weighted average rate (for call) is seen at 5.35-5.40% and (that of) TREPS (tri-party repo) will be around 5.15%." 

The central bank's net absorption from the banking system – a proxy for liquidity surplus – was INR 1.88 trillion Monday, slightly higher than INR 1.81 trillion Sunday. The surplus was large enough that some traders expected an overnight variable rate reverse repo auction by the RBI of up to INR 1 trillion on Tuesday.

"If it doesn't happen today (Tuesday), then I don't see a point of it as there are GST outflows (later) this week," a dealer at a large state-owned bank said.  

Outflows to the tune of INR 1.8 trillion to INR 2.1 trillion are expected between Wednesday and Saturday for GST payments to the government that could push up call money rates, dealers said. This may even prompt the RBI to conduct a variable rate repo auction to smoothen rates and cap them near the repo rate of 5.50% later this week. (J. Navya Sruthi) 

End

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

Edited by Deepshikha Bhardwaj

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