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Informist, Wednesday, Jan. 21, 2026

By Kabir Sharma

MUMBAI - The interbank call money rate ended near the Reserve Bank of India's marginal standing facility rate of 5.50% on Wednesday on firm demand for funds from banks amid lower surplus liquidity and outflows for goods and services tax payments, dealers said.

"More outflows were there today (Wednesday) and there were also not many lenders. I think more than INR 1 trillion outflows have happened today for GST (payments)," a dealer at a major state-owned bank said. "We can expect liquidity to fall to around 30,000 crore (INR 300 billion) deficit Wednesday," the dealer said. 

The one-day call rate ended at 5.48% Wednesday, higher than 4.80% on Tuesday. The weighted average call rate Wednesday was 5.43%, against 5.42% Tuesday. The weighted average rate in the broader tri-party repo market also rose above the repo rate, to 5.27% Wednesday, sharply higher than 5.12% in the previous session.

"There seemed to be some traction and lending from mutual funds in TREPS, which was required as most of the GST outflows happened today," a dealer at a state-owned bank said. 

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 721.31 billion Tuesday, down from INR 818.62 billion Monday. Cash balances with the RBI as on Tuesday were INR 7.65 trillion, down from INR 7.78 trillion Monday, against the requirement of INR 7.64 trillion for the fortnight ending on Jan. 31. The surplus as well as the cash balances fell Tuesday due to GST payments to the government, dealers said.

Dealers expect RBI to conduct an overnight VRR auction for INR 500 billion to INR 1 trillion Thursday so that maturity will be Friday, the same as Monday's auction. "We will have OMO inflows Friday, so liquidity may return to surplus by Friday," a dealer at a private bank said. 

In Monday's four-day VRR for INR 1 trillion, the RBI took all bids for INR 587.40 billion at 5.26%. The reversal of this VRR is due on Friday. At Wednesday's eight-day VRR the central bank took all INR-265.35-billion bids at 5.26%.

OUTLOOK

On Thursday, 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.

"Rates will remain on higher side (at MSF) for rest of the week as there are no inflows other than OMO," a dealer at a primary dealership said. Dealers expect call and tri-party repo market rates to open above repo rate Thursday. A few also expect call rate to open above the RBI's MSF rate of 5.50%.

CALL RATE

5.48%--Wednesday's close for one-day loans

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

4.80%--Tuesday'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 on firm demand for funds amid GST outflows

By J. Navya Sruthi

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. They added that the longer tenure of Wednesday's variable rate repo auction also kept rates at the higher end of the liquidity adjustment facility corridor. 

At 1001 IST, the one-day call rate was at 5.45%, against 4.80% at close on Tuesday. The call rate opened at 5.50% Wednesday, for the third day in a row. The weighted average call rate was 5.50%, against 5.42% on Tuesday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.24%, compared to 5.12% in the previous session. 

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 721.31 billion Tuesday, down from INR 818.62 billion Monday. Cash balances with the RBI as on Tuesday were INR 7.65 trillion, down from INR 7.78 trillion Monday, against the requirement of INR 7.64 trillion for the fortnight ending on Jan. 31. The surplus as well as the cash balances fell Tuesday due to GST payments to the government, dealers said.

Dealers expect a deficit in systemic liquidity on Wednesday and Thursday before inflows from the RBI's INR 500-billion open market operations auction, which is due Friday. The market sees around INR 1 trillion of outflows scheduled for Wednesday for GST payments, while the total outflows during Monday and Wednesday for GST are seen at INR 1.5 trillion to INR 1.8 trillion. 

The RBI conducted an eight-day VRR for INR 500 billion between 0930 IST to 1000 IST on Wednesday. "There will not be much attraction in today's (Wednesday's) VRR auction because of the maturity," a dealer at a private bank said. "Longer VRR is also pushing up rates in call and TREPS (tri-party repo market)," another dealer at another private bank said. 

The central bank is likely to set a cut-off of 5.26% with a median estimate of INR 250 billion, according to the Informist poll of 10 market participants. Estimates for total accepted bids were between INR 100 billion and INR 500 billion at the auction. 

"I think RBI is seeing liquidity to be in deficit till government (month-end) inflows start, because of which it came with an eight-day VRR. But I am not sure why the amount is very less," a dealer at a state-owned bank said. "Only after result (of the eight-day VRR) we can expect anything about more VRRs," the dealer said.

In Monday's four-day VRR for INR 1 trillion, the RBI took all bids at INR 587.40 billion at 5.26%. The reversal of this VRR is due on Friday.

End

Edited by Vandana Hingorani

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