More Stories

Informist, Tuesday, Jan. 20, 2026

By Aaryan Khanna

NEW DELHI – The interbank call money rate Tuesday ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds eased during the day. In the first half of the day, banks and primary dealerships met their demands, which pushed rates higher amid a fall in the banking system liquidity surplus below the INR 1.00-trillion mark due to goods and services tax payments to the government.

The one-day call rate ended at 4.80% Tuesday, the same as on Monday. The weighted average call rate Tuesday was 5.42%, against 5.40% Monday. The weighted average rate in the broader tri-party repo market remained well below the repo rate, at 5.12% Tuesday, similar to 5.13% in the previous session.

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 818.62 billion, down from INR 1.23 trillion Sunday. The surplus fell due to GST payments to the government as well as an increase in banks' cash balances with the RBI, dealers said.

The outflows further drained liquidity of up to INR 400 billion during the day, with the remainder being transacted Wednesday. The total estimates for GST-related outflows range between INR 1.5 trillion and INR 1.8 trillion, dealers said. This may drag the banking system liquidity into a deficit this week, according to some estimates.

"Despite all the RBI's liquidity infusion, he seems to be taking it all away using the forex operations," a dealer at a primary dealership said. "There is a great deal of liquidity discomfort in the market across every instrument right now – CD (certificate of deposit) rates, any short-term bonds – everything has spiked."

The RBI has infused durable liquidity into the banking system worth nearly INR 4 trillion since December through open market operation auctions and dollar-rupee buy-sell swap auctions. However, the central bank's dollar sales to support the rupee – including on Tuesday – has been draining rupee liquidity constantly, dealers said. While triparty repo rates have cooled over the past few days, the weighted average call rate – the operating target of monetary policy – has remained above the policy repo rate of 5.25%.

A lack of government spending is also preventing the benefits of the durable liquidity infusion from being seen in money markets, dealers said. The government's cash balances have likely piled up after its advance tax and GST collections in December, with inflows from the Centre muted at the beginning of January, dealers said. 

OUTLOOK

On Wednesday, the one-day call money rate may open above the RBI's repo rate of 5.25% due to early demand for funds. The liquidity surplus is expected to shrink on further outflows for GST payments. During the day, the call money rate is expected to move in a range of 4.70-5.55%, dealers said. 

The RBI has announced an eight-day, INR 500-billion variable rate repo auction at 0930-1000 IST Wednesday. The auction may aid market sentiment as some traders have been wanted longer-term VRR auctions to meet their funding requirements. However, this also shows the central bank does not expect government spending to kick in until the very end of the month, dealers said. The settlement of the central bank's open market operation to buy INR 500 billion of bonds Thursday will add to liquidity by Friday.

CALL RATE

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

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

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near RBI's MSF rate as liquidity surplus falls amid GST outflows

MUMBAI – The interbank call money rate was near the Reserve Bank of India's marginal standing facility rate of 5.50% as systemic liquidity fell due to firm demand for funds amid outflows for goods and services tax payments, dealers said. Primary dealerships and most banks were on the borrowing side amid pressure from GST payments. 

At 1007 IST, the one-day call rate was at 5.45%, against 4.80% at Monday's close. The weighted average call rate was 5.50%, against 5.40% Monday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.21%, compared to 5.13% in the previous session. 

"Around 20,000 to 30,000 crores (INR 200 billion to INR 300 billion outflows) GST payments happened yesterday (Monday). We can expect the rest to happen today (Tuesday)," a dealer at a state-owned bank said. The market expects INR 1.5 trillion to INR 1.8 trillion outflows for GST payments.        

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 818.62 billion, down from INR 1.23 trillion Sunday. A few dealers expect that systemic liquidity may fall to a deficit by Wednesday due to pressure from GST outflows. 

Dealers expect the central bank to conduct an overnight or two-day variable rate repo auction to support liquidity in the banking system. "Tomorrow, we can expect overnight VRR for INR 500 billion to INR 1 trillion," the dealer said. Another dealer at a private bank expects that the RBI may even roll over Monday's four-day VRR, which will be maturing on Thursday.

In Monday's four-day VRR, the RBI took all bids at INR 587.40 billion at 5.26%. "If we compare this with earlier VRRs, this is much better as subscription went to almost 60,000 crores (INR 600 billion)," the dealer at the private bank said.  (J. Navya Sruthi) End

US$1 = INR 90.98

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

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.