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Informist, Thursday, Dec. 18, 2025

 

By J. Navya Sruthi

MUMBAI – The one-day interbank call money rate ended below the Reserve Bank of India's standing facility rate of 5.00% Thursday as demand for funds eased after the central bank held its fifth variable rate repo auction earlier in the day, dealers said. Rates in the call and tri-party repo markets were slightly lower Thursday compared to Wednesday. 

 

The one-day call rate ended at 4.80%, down from 5.35% Wednesday. However, the weighted average call rate was above the repo rate at 5.36%, but lower than 5.46% on Wednesday. The weighted average rate in the broader tri-party repo market was 5.15%, sharply down from 5.28% on Wednesday. The tri-party repo rate closed at 5.10%. Earlier in the day, the overnight tri-party repo rate rose to a high of 5.87% for an amount of INR 9.5 million. However, dealers said it was an error trade.

 

Rates cooled off later Thursday as demand for funds eased after RBI's VRR auction. The RBI allotted INR 500.53 billion at the 4-day VRR auction Thursday against the notified amount of INR 750 billion. "Also, there were no major outflows today (Thursday) which also kept rates down (around repo)," a dealer at a state-owned bank said.

 

The RBI has infused a total of INR 2.59 trillion of transient liquidity so far this week through five VRR auctions. The RBI's net injection into the banking system – a proxy for the liquidity deficit – was INR 685.86 billion Wednesday, the highest since Oct. 20. The RBI's net injection was INR 607.88 billion Tuesday.

 

Dealers said the liquidity deficit in the banking system is likely to decrease slightly Thursday. "It (liquidity) may go into surplus slightly (Thursday)," the dealer said. However, they expect rates to open on the higher side, above the repo rate of 5.25%, as outflows for goods and services tax are scheduled to start from Friday. Dealers expect around INR 1.8 trillion outflows for GST payments during Friday and Monday. 

 

"Call money market (rate) may come down to 5.10% maximum, I'm not expecting lower than that," a dealer at a private sector bank said. "Because of the coming GST crunch and all, there might be takers for funds. Deals are happening at 5.37%, so call won't fall below 5.10%. This applies to quantum deals, I'm not talking about small deals."

 

To support the banking system, the RBI is likely to come up with one more VRR auction of INR 750 billion for shorter tenure, dealers said. Some dealers were of the view that the central may roll over the existing VRR auctions till next week.

 

OUTLOOK

On Friday, the one-day call money rate may open above the RBI's repo rate of 5.25%, around 5.50%, as liquidity is expected to remain in deficit and due to pressure from outflows for goods and services tax payments. Dealers expect another VRR auction Friday to infuse transient liquidity in the banking system. During the day, the one-day call money rate is seen moving in a range of 4.80-5.50%, dealers said.

 

CALL RATE

4.80%--Thursday's close for one-day loans

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

5.35%--Wednesday's close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	THURSDAY	WEDNESDAY
Overnight	5.44	5.55
3-day	--	--
14-day	5.79	5.79
1-month	5.88	5.89
3-month	6.01	6.01

---

India Call: Above RBI's repo rate on liquidity crunch, more borrowers

 

MUMBAI – The one-day interbank call rate was above the Reserve Bank of India's repo rate of 5.25% as the liquidity deficit in the banking system widened, leading to more borrowers in the market, dealers said. The RBI's net injection into the banking system – a proxy for the liquidity deficit – was INR 685.86 billion Wednesday, the highest since Oct. 20. The RBI's net injection was INR 607.88 billion Tuesday.

 

At 0942 IST, the one-day call rate was 5.45%, higher than Wednesday's close of 5.35%. The weighted average call rate was 5.45%, against 5.46% Wednesday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.27%, against 5.28% on Wednesday.

 

The one-day call rate opened above the RBI's repo rate of 5.25% for the fifth consecutive day. This was despite the RBI infusing INR 2.09 trillion of transient liquidity into the banking system through four variable rate repo auctions between Monday and Wednesday. Currently, mutual funds are not seen in the market because of redemption pressure amid advance tax payments, leaving fewer lenders in the market and leading to a spike in rates, dealers said. According to market participants, mutual funds are major lenders in the tri-party repo market.    

 

On the other hand, the central bank conducted another VRR auction Thursday, the fifth for this week, as the liquidity deficit rose and also keeping in mind the outflows of INR 1.8 trillion to INR 2 trillion for goods and services tax payments, starting Friday. At Thursday's four-day VRR auction for INR 750 billion, the central bank is likely to set up a cut-off at 5.26%, according to an Informist poll. Estimates for total accepted bids were between INR 325 billion and INR 750 billion at the auction, with a median estimate of INR 500 billion. 

 

"Everything depends on the VRR auction. We can expect one more (VRR) next week or maybe tomorrow (Friday) if subscription is not good in today's (VRR)," a dealer at a state-owned bank said. The dealer expects the weighted average rate of call and tri-party repo for the day to remain around 5.45% and 5.30%, respectively. (J. Navya Sruthi)

 

End

 

With inputs from Cassandra Carvalho

Edited by Vandana Hingorani

 

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