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Informist, Saturday, Dec. 20, 2025

 

MUMBAI – The two-day interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate Saturday due to ample surplus liquidity and low demand for funds, dealers said. As is usual for Saturdays, volume in money markets was muted. The two-day call rate ended at 4.75% compared with 5.00% for three-day loans on Friday. 

 

Dealers said demand for fund eased after the RBI conducted five variable rate repo auctions in the week ended Saturday and announced another two-day variable rate repo auction for INR 1 trillion, to be held on Monday. This week, the RBI infused a total of INR 2.59 trillion of transient liquidity to support the banking system amid outflows for advance tax and GST payments. Of this, INR 1.57 trillion will be reversed Monday, leaving INR 1.02 trillion of transient liquidity in the banking system. 

 

"It is because there is not much liquidity today as it is Saturday, rate was 5.50%. But overall rates are lower," a dealer at a state-owned bank said. "There will be substantial interest in VRR (on Monday) as four-day VRR (conducted on Thursday) will be maturing Monday. I am expecting full subscription but (on conservative side) at least 70-80% will be subscribed."

 

The RBI's net injection into the banking system – a proxy for the liquidity deficit – was INR 299.10 billion Thursday, lower than a net injection of INR 685.86 billion Wednesday. After the Monetary Policy Committee lowered the policy repo rate by 25 basis points to 5.25% in a unanimous decision earlier this month, the RBI announced durable liquidity infusion measures in December through INR 1 trillion of open market operations to buy bonds and a $5 billion dollar-rupee buy-sell swap.

 

The RBI Tuesday held a buy-sell swap worth $5 billion and an open market operation worth INR 500 billion which also helped to narrow the liquidity deficit. The first-leg settlement of the dollar-rupee buy-sell swap infused around INR 450 billion of durable liquidity into the banking system, which reduced the liquidity deficit. 

 

OUTLOOK

* On Monday, TREPS may open above repo rate at 5.30%. Call will likely open at 5.40%.

* During the day, the one-day call money rate is seen in the range of 4.80%-5.50%, dealers said.

* The inflows from the central bank's INR-500-billion bond purchases at the open market operation auction held Thursday will be shown in Friday's liquidity number which will be released on Monday. Friday's liquidity is expected to be in surplus of INR 250 billion to INR 300 billion because of OMO.   

 

CALL RATE

4.75%--Saturday's close for two-day loans

4.75%--Saturday's open for two-day loans

5.00%--Friday's close for three-day loans

 

End

 

US$1 = INR 89.27

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

 

Reported by Janwee Prajapati

Edited by Deepshikha Bhardwaj

 

 

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