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Informist, Thursday, Jan. 29, 2026

By Vaishali Tyagi

NEW DELHI/MUMBAI - The one-day interbank call money rate ended above the Reserve Bank of India's repo rate Thursday owing to strong demand for funds amid tight liquidity in the banking system and less number of lenders, which pushed rates higher, dealers said. 

The one-day call rate ended at 5.45% Thursday, higher than the one-day call rate of 5.35% Wednesday. The weighted average call rate was 5.31%, higher than 5.26% Wednesday. The weighted average rate in the broader tri-party repo market rose to 5.27% Thursday from 5.16% on Wednesday.

Call money rates were also driven higher due to a rise in certificate of deposit rates, dealers said. The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 677.08 billion Wednesday, down from INR 836.87 billion Tuesday. Liquidity fell Wednesday due to outflows of INR 383 billion for payment for state bond auction. 

"Usually call and TREPS rates rise when VRR is under subscribed," a dealer at a state-owned bank said. "Low liquidity and high CD rates also lead to this spike in rates." The RBI conducted a two-day variable rate repo auction for INR 500 billion between 0930 IST and 1000 IST Wednesday to support liquidity in the banking system. But the subscription was only INR 62.35 billion with the cut-off at 5.26%. The reversal of this amount is due Friday.

Liquidity also stayed low because the Centre's month-end spending has not kicked in yet, dealers said. The RBI last week announced several measures to infuse liquidity into the financial system. The RBI is set to hold a 90-day VRR auction for INR 250 billion on Friday. The central bank also conducted an open market operation auction.

At the open market operation auction, the RBI bought INR 500 billion of gilts with the quantum accepted for the 7.26%, 2033 and 7.17%, 2030 bonds constituting more than 50% of the total notified amount. The cut-off price for the 7.30%, 2053 bond was at INR 99.28, sharply higher than an Informist poll estimate of INR 99.05.

OUTLOOK

On Friday, the three-day call money rate may open above the Reserve Bank of India's repo rate due to tight liquidity in the banking system. During the day, the call money rate is expected to move in a range of 4.50-5.45%, dealers said.

CALL RATE

5.45%--Thursday's close for one-day loans

5.30%--Thursday's open for one-day loans

5.35%--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 as liquidity surplus dn, demand for funds firm

MUMBAI – The interbank call money rate was above the Reserve Bank of India's repo rate of 5.25% as systemic liquidity fell Wednesday. Firm demand for funds from primary dealerships also kept rates above the repo rate, dealers said.   

At 0954 IST, the one-day call rate was at 5.35%, steady against Wednesday's close of 5.35%. The weighted average call rate was at 5.34%, compared to 5.26% on Wednesday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.21%, against 5.16% the previous trading day.

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 677.08 billion Wednesday, down from INR 836.87 billion Tuesday. Liquidity fell Wednesday due to outflows of INR 383 billion for payment for state bond auction. 

"We can see few lenders in TREPS (tri-party repo market) which is pushing rates higher. Yesterday's (Wednesday) VRR (variable rate repo) auction was also under-subscribed. Usually, rates rise when VRR auction is under-subscribed," a dealer at a small finance bank said. At 1002 IST, borrowing in the tri-party repo market was INR 524.94 billion while lending was just INR 284.15 billion, according to data from the Clearing Corp. of India.  

The RBI conducted a two-day variable rate repo auction for INR 500 billion between 0930 IST and 1000 IST Wednesday to support liquidity in the banking system. But the subscription was only INR 62.35 billion with the cut-off at 5.26%. 

The RBI last week announced several measures to infuse liquidity into the financial system. The RBI is set to hold a 90-day VRR auction for INR 250 billion on Friday. It will also 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 Thursday and Feb. 5 to buy gilts worth INR 500 billion each through OMOs. (J. Navya Sruthi)

End

Edited by Deepshikha Bhardwaj

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