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Informist, Friday, Jan. 30, 2026

By Vaishali Tyagi and J. Navya Sruthi

NEW DELHI/MUMBAI - The interbank call money rate Friday ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds eased during the day after the central bank conducted two 90-day variable repo rate auctions to support liquidity in the banking system, dealers said.

The three-day call rate ended at 4.80% Friday, lower than the one-day call rate of 5.45% Thursday. The weighted average call rate was 5.49%, higher than 5.31% Thursday. The weighted average rate in the broader tri-party repo market fell to 5.16% Friday from 5.27% on Thursday.

The RBI received bids worth INR 950.62 billion at the first 90-day variable rate repo auction and accepted bids for INR 250.04 billion. It conducted another 90-day variable rate repo auction for INR 2 trillion from 1300 IST to 1330 IST and took all bids worth INR 1.12 trillion. The net liquidity absorbed in the banking system by the RBI – a proxy for the liquidity surplus – was INR 829.68 billion Thursday, up from INR 677.08 billion Wednesday.

At the start of the day, the call rate was above the RBI's Marginal Standing Facility rate of 5.50% due to firm demand for funds ahead of the reporting fortnight, dealers said. Rates came down after the two VRRs. Further, settlement of the INR-500-billion open market operation auction conducted Thursday likely aided systemic liquidity, dealers said.

There were inflows from open market operations auction conducted Thursday and the government's month-end spending, which eased some liquidity pressure. "There was some government's month-end spending today and there will be tomorrow," a dealer at a private sector bank said. "Despite tomorrow being a reporting fortnight, rates will still be lower. Whatever amount we got from VRR is sufficient for market so far. I think rates will cool down a bit as there are no major scheduled outflows till next 10 to 15 days."

Dealers said the RBI should have waited till Monday for the second 90-day VRR auction as rates in tri-party repo and call money markets were down by 1200 IST and also most of the borrowing for day was done before the second VRR. Dealers said if the RBI had conducted this second 90-day VRR on Monday, then it would have been completely subscribed.

OUTLOOK

On Saturday, the two-day call money rate may open below the RBI's repo rate of 5.25%. During the day, the call money rate is expected to move in a range of 4.90-5.10%, dealers said.

CALL RATE

4.80%--Friday's close for three-day loans

5.55%--Friday's open for three-day loans

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Above RBI's MSF rate on firm demand for funds

MUMBAI – The interbank call money rate was above the Reserve Bank of India's marginal standing facility rate of 5.50% due to firm demand for funds ahead of reporting fortnight, dealers said. The RBI also conducted a 90-day variable rate repo auction from 0930 IST to 1000 IST Friday, which also kept rates higher, they added.  

At 0945 IST, the three-day call rate was at 5.55%, up from Thursday's close of 5.45% for one-day loans. The weighted average call rate was at 5.55%, compared to 5.31% on Thursday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 5.26%, against 5.27% the previous trading day.

"Most deals (in the call money market) happen for three days, though it is a working day tomorrow (Saturday), which is keeping rates up," a dealer at a state-owned bank said. The cash balances as on Thursday with RBI were INR 7.60 trillion, lower than the requirement of INR 7.64 trillion for the fortnight ending Saturday.

"Bidding at auction can go up to 40,000 to 50,000 (INR 400 billion to INR 500 billion), as there is a prepayment option," the dealer said. On Tuesday, the RBI said participants will have an option to prepay the amount borrowed at the 90-day VRR auction at least two days prior to the original date of reversal, which is Apr. 30. However, there is no option for partial prepayment; participants must repay the entire amount that they borrow at the auction. Still, the auction is likely to be oversubscribed with the cut-off being higher than the minimum 5.26%.

Dealers also added that firm rates on certificates of deposits will also lead more banks to participate in the auction. Rates on a three-month CD were at 7.20-7.25% Thursday, surging from 6.03% a month ago. Rates on a one-year CD were also higher at 7.15-7.20% Thursday from 6.62% in December.   

The RBI is likely to set a cut-off of 5.28% at Friday's 90-day VRR auction and the auction is likely to be fully subscribed at INR 250 billion, according to an Informist poll of 11 market participants. Respondents expected the cut-off rate to be in the range of 5.26-5.35%.

A few dealers also said that there may be tepid take-off at this auction, as banks usually do not prefer a longer-tenure VRR auction. Respondents of the Informist poll expected the bidding at the auction to be at INR 100 billion to INR 300 billion.   

The reversal of INR 62.35 billion infused through a two-day VRR Wednesday is due Friday. The net liquidity absorbed in the banking system by the RBI – a proxy for the liquidity surplus – was INR 829.68 billion Thursday, up from INR 677.08 billion Wednesday. (J. Navya Sruthi)

End

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

Edited by Ashish Shirke

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