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Informist, Friday, Jan. 23, 2026

By Kabir Sharma

MUMBAI – The interbank call money rate ended above the Reserve Bank of India's repo rate on Friday due to demand for funds from banks ahead of the long weekend, dealers said. Liquidity conditions improved Friday due to settlement of RBI's open market purchase of gilts, but the benefit was nearly wiped out by the central bank not rolling over a four-day VRR auction. Money markets will be closed on Monday on account of Republic Day.

The four-day call rate ended at 5.30% Friday, lower than the one-day call rate of 5.55% Thursday. The weighted average call rate was 5.39%, lower than 5.52% Thursday. The weighted average rate in the broader tri-party repo market also eased to 5.11% Friday from 5.19% Thursday due to an increase in liquidity with mutual funds, dealers said. 

"The call rate fell slightly as banks were borrowing through TREPS (triparty repo)," a dealer at a state-owned bank said. "Because of the OMO, banks demand was also lower, but it was still near MSF as liquidity is tight and barely in surplus." The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 101.70 billion Thursday, against INR 61.21 billion net injected Wednesday. 

Rates eased in the last hour of trade as the Reserve Bank of India announced various liquidity measures, but overall rates remained on the higher side as the flows from these measures will start only in the last days of January, dealers said. 

The RBI Friday announced several measures to infuse liquidity into the financial system. The central bank will conduct a 90-day variable rate repo operation on Jan. 30 and a dollar-rupee buy-sell swap auction as well as open market operation auctions to buy gilts in February.

The RBI will conduct a $10 billion, three-year dollar-rupee buy-sell swap auction on Feb. 4, which will infuse rupee liquidity into the banking system. It will also conduct auctions on Feb. 5 and Feb. 12 to buy gilts worth INR 500 billion at each through OMOs, the central bank said. The 90-day variable rate repo auction is the longest such operation the RBI has announced in recent years. It will be for INR 250 billion.

The central bank conducted an INR-500-billion OMO auction Thursday and inflows of this durable liquidity would be seen in Friday's numbers. The RBI also conducted three variable rate repo auctions this week to support liquidity in the banking system. As of Friday, INR 1.35 trillion of transient liquidity is available in the banking system which was infused through the three VRR auctions conducted on Monday and Friday. The reversal of Monday's VRR auction of INR 587.40 billion was also due Friday.  

OUTLOOK

Money markets will be closed on Monday on account of Republic Day. 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. Liquidity is expected to return to a surplus after the settlement of the RBI's INR-500-billion purchase of gilts through OMOs, with no major inflows or outflows. During the day, the call money rate is expected to move in a range of 4.70-5.55%, dealers said.

CALL RATE

5.30%--Friday's close for four-day loans

5.45%--Friday's open for four-day loans

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call:Near MSF rate to meet borrowing requirement ahead of long weekend

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% due to firm demand for funds to meet borrowing requirements ahead of the long weekend, dealers said. Money markets will be closed on Monday on account of Republic Day.

At 1011 IST, the four-day call rate was at 5.45%, down from Thursday's close of 5.55% for one-day loans. The weighted average call rate was also down at 5.44%, compared to 5.52% on Thursday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.19%, unchanged from the previous day.

"Rates are seen falling later (Friday) as we have no IPOs (initial public offering) locked. We also have yesterday's 5-day VRR and OMO (open market operations) inflows will be there today (Friday), so borrowers are also lower compared to yesterday (Thursday)," a dealer at a private bank said. 

The central bank conducted an INR 500-billion OMO auction Thursday and inflows of this durable liquidity would be seen Friday. The RBI also conducted three variable rate repo auctions this week to support liquidity in the banking system. As of Friday, INR 1.35 trillion of transient liquidity is available in the banking system which was infused through the three VRR auctions conducted on Monday and Friday. The reversal of Monday's VRR auction of INR 587.40 billion is due Friday.  

Meanwhile, systemic liquidity turned into a surplus while cash balances with the RBI fell by INR 145 billion as on Thursday to INR 7.51 trillion. The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 101.70 billion Thursday, against INR 61.21 billion net injected Wednesday.   

Dealers said inflows through the OMO auction and existing liquidity from the VRR auction is likely to keep rates slightly lower compared to Thursday. They also said the RBI might not announce another VRR auction due to slight improvement in liquidity and no major scheduled outflows left for the month. 

"If we see, rates opened lower (from Thursday) and TREPS (rates have) already cooled down," the dealer said. On Thursday, call rates rose to 5.65%, the highest since Dec. 31, as systemic liquidity turned to deficit amid outflows for GST payments of around INR 1.7 trillion. 

End

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

Edited by Deepshikha Bhardwaj

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