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Informist, Monday, Jan. 19, 2026

By Aaryan Khanna

NEW DELHI – The interbank call money rate Monday ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds eased during the day. Banks and primary dealerships met their demands in the first half of the day, with some banks citing payments for goods and services tax to the government as a reason for high interbank rates earlier, dealers said.

The one-day call rate ended at 4.80% against 4.75% for two-day loans Saturday. The weighted average call rate Monday was 5.40%, against 4.82% Saturday and 5.41% Friday. The weighted average rate in the broader tri-party repo market remained well below the repo rate at 5.13% Monday, compared with 5.11% Saturday and 5.17% Friday.

The net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was INR 1.23 trillion Sunday, similar to INR 1.25 trillion Saturday and INR 1.22 trillion Friday. The liquidity surplus rose to its highest since Dec. 14 after the settlement of the RBI's $10 billion, three-year dollar-rupee buy/sell swap auction added over INR 900 billion to the banking system Friday, dealers said.

However, the net liquidity absorbed figure did not fully reflect the easing liquidity conditions. This is because most banks increased their cash balances with the RBI to meet regulatory requirements, dealers said. Banks held cash balances of INR 7.70 trillion with the RBI Sunday, up from INR 7.24 trillion Thursday.

"The liquidity is in better shape now, all banks have shored up cash balances over the weekend," a dealer at a private-sector bank said. "While some banks were facing significant outflows for GST, I think the bulk of our payments will be conducted from tomorrow (Tuesday)."

Liquidity conditions are expected to tighten during the rest of the week as GST outflows, estimated around INR 1.5 trillion, drain liquidity from the banking system, dealers said. This is expected to keep call money rates elevated. Though triparty repo rates are expected to remain below the repo rate of 5.25%, the recent volatility in mutual funds' lending led to banks tapping the RBI's variable rate repo auction. The central bank conducted a four-day VRR auction for INR 1 trillion between 0930 IST and 1000 IST Monday. It accepted all bids totalling INR 587.40 billion at the auction, setting a cut-off rate of 5.26%. 

OUTLOOK

On Tuesday, the one-day call money rate may open above the RBI's repo rate of 5.25% due to early demand for funds. During the day, the call money rate is expected to move in a range of 4.70-5.50%, dealers said. 

Goods and services tax outflows are expected to drain liquidity and keep up the pressure on money market rates during the week. The RBI may conduct more short-term VRR auctions in case money market rates spike during the week, dealers said. The settlement of the central bank's open market operation to buy INR 500 billion of bonds Thursday will also add to liquidity by Friday.

CALL RATE

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

5.50%--Monday's open for one-day loans

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: At RBI's MSF on firm demand for funds amid GST outflows

MUMBAI - The interbank call money rate was near the Reserve Bank of India's marginal standing facility rate of 5.50% due to firm demand for funds from primary dealerships and banks, dealers said. They added that most market participants, including banks, were on the borrowing side because of scheduled outflows for goods and services tax payments starting Monday.  

"GST outflows have already started, so call rate is high. Not sure about outflows from the system but from our bank, we have some 100 crores (INR 1 billion) worth outflows scheduled for today (Monday)," a dealer at a state-owned bank said.

"Majority of the GST payments take place on 19th (Monday), which will be around 1 lakh crore (INR 1 trillion) and the rest can be seen during (the) remaining two days," a dealer at a private bank said. The market expects around INR 1.5 trillion of outflows for GST payments.

At 1001 IST, the one-day call rate was at 5.50%, against 4.75% at close for two-day loans on Saturday. The weighted average call rate was 5.50%, against 4.82% Saturday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.21%, compared to 5.11% in the previous session. 

The RBI conducted a four-day variable rate repo auction for INR 1 trillion between 0930 IST and 1000 IST Monday. The central bank is likely to set a cut-off of 5.26% with a median of INR 475 billion at Monday's four-day VRR auction, according to an Informist poll of 10 market participants. Estimates for total accepted bids were between INR 175 billion and INR 900 billion, according to the poll.

There were mixed responses about the total accepted bids. A few market participants expected full subscription as GST outflows would start on Tuesday, while a few said it was too long a tenure. "We can borrow in TREPS, where rates are lower than (that in) VRR. It is for four days, which is a longer tenure and so the market is not much interested in it (VRR auction)," the dealer at a state-owned bank said.

Meanwhile, the net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 1.22 trillion Friday, up from INR 1.09 trillion Thursday. Systemic liquidity rose Friday due to inflows from the first-phase settlement of the FX swap auction Thursday.  (J. Navya Sruthi)  End

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

Edited by Ashish Shirke

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