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Informist, Monday, Dec. 15, 2025

By Vaishali Tyagi and Kabir Sharma

MUMBAI – The one-day interbank call money rate ended at the Reserve Bank of India's repo rate of 5.25% Monday due to outflows for advance tax payments and demand for funds from banks and primary dealerships, dealers said. "Rates rose after 2:30-3:00 (1430-1500 IST), when there was a bid for bigger amount. From our bank over INR 10 billion was paid (for advance tax payments) in two shots," a dealer at a state-owned bank said.

The one-day call rate ended at 5.25% against the 5.20% close for three-day loans Friday. The weighted average call rate was 5.25%, against 5.18% the previous day. The weighted average rate in the broader tri-party repo market was 5.09% Monday, up from 5.01% Friday. The tri-party repo rate rose to 5.60% earlier during the day, the highest since Nov. 28. The RBI's Monetary Policy Committee had cut the repo rate by 25 basis points on Dec. 5.

The tri-party repo rate Monday soared above the Reserve Bank of India's Marginal Standing Facility rate of 5.50% amid outflows for advance tax payments and poor subscription at the 11-day variable rate repo auction for INR 750 billion, dealers said. The central bank's defence of the rupee in the foreign exchange spot and forwards markets added to pressure on the money market rates, dealers said.

At the 11-day repo auction, the RBI got bids for only INR 249.69 billion. The central bank's net absorption from the banking system – a proxy for the liquidity surplus – was INR 1.83 trillion on Sunday, down from INR 1.85 trillion Saturday and INR 2.14 trillion Friday. 

Dealers see rates move toward the upper end of the liquidity adjustment facility corridor, driven by outflow of INR 1.50 trillion to INR 1.75 trillion for advance tax payments. On Tuesday, the RBI will conduct a 10-day variable rate repo auction of INR 1.5 trillion. On Friday, the RBI said it would conduct a 10-day VRR auction of INR 750 billion on Tuesday. The central bank raised the amount to INR 1.5 trillion on a "review of current and evolving liquidity conditions", RBI said Monday after market hours. 

OUTLOOK

On Tuesday, the one-day call money rate may open near the RBI's repo rate of 5.25% on early demand for funds. Outflows for advance tax are expected to drain liquidity, dealers said. During the day, the one-day call money rate is seen moving in a 4.50-5.30% range, dealers said.

The outflows are expected to be partially offset by the RBI's bond purchases at OMO auctions, which will add INR 500 billion of liquidity on Friday, dealers said. In addition, the central bank has announced a 10-day VRR auction on Tuesday of INR 1.50 trillion, which will keep money market rates in check amid the outflows, they said. 

CALL RATE

5.25%--Monday's close for one-day loans

5.30%--Monday's open for one-day loans

5.20%--Friday's close for three-day loans

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: At RBI's repo on advance tax payments, early demand for funds

MUMBAI – The one-day interbank call money rate was at the Reserve Bank of India's repo rate of 5.25% Monday due to outflows for advance tax payments and early demand for funds from primary dealerships, dealers said. Dealers expect rates to remain in the 5.25-5.30% range during the day due to major scheduled outflows. 

At 0954 IST, the one-day call rate was at 5.25%, up from Friday's close of 5.20% for three-day loans. The weighted average call rate was 5.30%, up from 5.18% Friday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.08%, higher than 5.01% Friday.

Although Friday's liquidity in the banking system was ample due to the RBI's INR 500-billion open market operation auction, dealers expect INR 1.50 trillion to INR 1.75 trillion worth of outflows for advance tax payments because of which dealers see rates towards the higher end of the liquidity adjustment facility corridor. The central bank's net absorption from the banking system – a proxy for the liquidity surplus – was INR 2.14 trillion Friday, higher than INR 1.84 trillion Thursday. 

The RBI is also conducting an 11-day INR 750 billion variable rate repo auction on Monday to support liquidity in the banking system. However, dealers do not expect the notified amount to be fully subscribed as they await Tuesday's 10-day INR 750 billion VRR auction. "Rates in TREPS (tri-party repo market) are still lower and that shows not much subscription happened (in VRR auction)," a dealer at a state-owned bank said.   

The RBI is likely to set a cut-off of 5.26% at Monday's 11-day variable rate repo auction for INR 750 billion, according to the median of an Informist poll of 11 market participants. The auction was held between 0930 IST and 1000 IST. Of the 11 respondents, five were from state-owned banks, three were from private-sector banks and three were from primary dealerships. Estimates for total accepted bids were between INR 250 billion and INR 750 billion at the auction, with a median estimate of INR 475 billion. (J. Navya Sruthi)

End

With inputs from J. Navya Sruthi

Edited by Saji George Titus

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