More Stories

Informist, Thursday, Jan. 22, 2026

By Aaryan Khanna

NEW DELHI – The interbank call money rate ended above the Marginal Standing Facility rate of 5.50% due to robust demand for funds from banks and liquidity deficit in the banking system, dealers said. Liquidity of about INR 1.5 trillion-INR 1.8 trillion had drained from the banking system due to goods and services tax payments and was not expected to be replenished by the government spending until next week, they said.

The one-day call rate ended at 5.55% Wednesday, higher than 5.48% Wednesday. In early trade, the overnight call money rate rose to 5.65%, the highest since Dec. 31. The weighted average call rate was 5.52%, higher than 5.44% Wednesday. However, the weighted average rate in the broader tri-party repo market eased to 5.19% Wednesday from 5.27% Wednesday due to an increase in liquidity with mutual funds, dealers said. 

The net liquidity injected in the banking system by the RBI--a proxy for the liquidity deficit--was INR 61.21 billion Wednesday, against INR 721.31 billion net absorbed on Tuesday, indicating a surplus. Banking system liquidity remained in surplus for only two weeks before falling below the threshold Wednesday. The bulk of GST payments worth around INR 800 billion to INR 1 trillion were conducted Wednesday, draining liquidity, dealers said. 

"If the RBI cannot maintain a liquidity surplus after all that it has done, since it is entirely wiped out with GST (outflows), obviously something is wrong," a dealer at a private-sector bank said. "If he (RBI) brought an on-tap facility or did daily VRR (variable rate repo auctions) at least the market would have comfort on daily support."

In January alone, the Reserve Bank of India has infused INR 1.0 trillion of durable liquidity through open market operation auctions as well as over INR 900 billion through a $10 billion, three-year dollar-rupee buy/sell swap auction. This is on the back of a nearly INR 2.0 trillion infusion through such means in December, which itself followed a 1 percentage point cut in cash reserve ratio that freed up around INR 2.4 trillion in liquidity for banks.

The settlement of its OMO auction conducted Thursday will infuse liquidity of INR 500 billion Friday, which may ease money market rates and demand for funds, dealers said. However, several banks expect the RBI to conduct a four-day VRR auction for up to INR 750 billion Friday as money markets are shut Monday for Republic Day. On Thursday, the RBI got INR 640.71 billion bids at its five-day, INR 500 billion VRR auction and took INR-500.10-billion bids at a weighted average and cut-off rate of 5.26%. The liquidity infusion helped keep the call money rate below the MSF rate but was not able to satisfy banks' entire demand for cash, dealers said.

OUTLOOK

On Friday, the four-day call money rate may open above the RBI's repo rate of 5.25% due to early demand for funds. Liquidity is expected to return to a surplus by Friday after the settlement of the RBI's INR-500-billion purchase of gilts through OMOs, with no major inflows or outflows Thursday. During the day, the call money rate is expected to move in a range of 4.70-5.55%, dealers said.

CALL RATE

5.55%--Thursday's close for one-day loans

5.60%--Thursday's open for one-day loans

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Above RBI's repo rate as systemic liquidity turns deficit

MUMBAI – The interbank call money rate was above the Reserve Bank of India's marginal standing facility rate of 5.50% as systemic liquidity fell into deficit on Wednesday amid demand for funds due to outflows for goods and services tax payments, dealers said. Outflows for GST payments were INR 1.7 trillion to INR 1.8 trillion between Monday and Wednesday, dealers said. 

The net liquidity injected in the banking system by the RBI – a proxy for the liquidity deficit – was INR 61.21 billion Wednesday, against INR 721.31 billion net absorbed on Tuesday.   

At 1029 IST, the one-day call rate was at 5.60%, against 5.48% at close on Wednesday. The weighted average call rate was 5.60%, against 5.44% on Wednesday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.31%, compared to 5.27% in the previous session. 

The one-day call rate opened at 5.60% Wednesday, 10 basis points above the RBI's MSF rate. The rate rose to 5.65%, the highest since Dec. 31, within the first hour of trading for the day.

The RBI Wednesday conducted a five-day INR-500-billion VRR auction to infuse transient liquidity into the system, which will eventually weigh on rates in the money market. "There may be full subscription in today's (Thursday) auction as we have three holidays. Depending on rates in market, bidding may also happen at 5.27%," a dealer at a state-owned bank said.   

According to the median of an Informist poll of eight market participants, the RBI is likely to set a cut-off of 5.26% at Thursday's five-day variable rate repo auction while the median for subscription was INR 450 billion.  

As of Thursday, INR 852.75 billion transient liquidity is available in the banking system which was infused through two VRR auctions conducted on Monday and Wednesday. The reversal of Monday's VRR auction of INR 587.40 billion is Friday and that of Tuesday's, with INR 265.35 billion, is Jan. 29.  (J. Navya Sruthi)  End

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

Edited by Akul Nishant Akhoury

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.