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Informist, Friday, Feb. 6, 2026

 

By Kabir Sharma and J. Navya Sruthi

 

MUMBAI – The interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate on Friday due to availability of significant excess liquidity in the banking system, dealers said. However, the weighted average call rate, tracked closely by the RBI, edged above the SDF rate in early trade and remained there for the better half of the day.  

 

The three-day call rate ended at 4.45%, against 5.05% for one-day loans in the previous session. The weighted average call rate was 5.06%, up from 5.03% Thursday. The weighted average rate in the broader tri-party repo market, which includes mutual funds, rose to 4.32% from 4.30% on Thursday.

 

Rates were slightly higher on Friday as most of the loans were for three days, dealers said. Moreover, the market was also upset as the RBI did not announce any liquidity measures in the monetary policy. "We were expecting some more announcements for long-term liquidity, but the absence of any measures at all was surprising," a dealer at a state-owned bank said. 

 

The rate-setting panel left the policy repo rate unchanged at 5.25% in a unanimous decision. It also retained the 'neutral' policy stance even as external member Ram Singh was of the view that the stance be changed to 'accommodative' from 'neutral'.

 

However, the RBI will remain proactive in liquidity management and ensure sufficient liquidity in the banking system to meet the productive requirements of the economy and to facilitate monetary policy transmission, Governor Sanjay Malhotra said Friday. The governor added that monitoring liquidity is a continuous process and "we have provided it outside policy". "We have OMO (auctions), (long-term, short-term) VRRs, VRRRs to ensure that we give liquidity, and we keep the overnight liquidity at the policy repo rate."

 

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – rose to INR 2.12 trillion Thursday, up from INR 1.96 trillion Wednesday. Along with more funds parked at SDF, there were also coupon payments for Treasury bills, state bonds, a green bond, and a 7.09%, 2054 bond, which boosted systemic liquidity.

 

OUTLOOK

On Saturday, the two-day call money rate may open below the RBI's SDF rate of 5.00% on low demand for funds. During the day, the call money rate is expected to move in a range of 4.50-5.00% due to low trading volume, as is usually the case on Saturdays, dealers said. They also expect rates to rise above SDF due to outflows for excise duty payments. The market expects around INR 700 billion worth of outflows for excise duty between Saturday and Monday. 

 

CALL RATE

4.45%--Friday's close for three-day loans

5.10%--Friday's open for three-day loans

5.05%--Thursday's close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.09	5.09
3-day	--	--
14-day	5.73	5.73
1-month	5.96	5.97
3-month	6.42	6.40

---

India Call: Near SDF on ample liquidity surplus; market eyes RBI policy

 

NEW DELHI – The inter-bank call money rate was near the Reserve Bank of India's Standing Deposit Facility rate of 5.0% due to ample surplus liquidity in the banking system, dealers said. Rates during the day will depend on the RBI's Monetary Policy Committee outcome and commentary. They expect the central bank to announce more measures, such as longer-tenure variable rate repo and OMO auctions, to support systemic liquidity, they said.

 

"Banks parked more money at SDF which pushed liquidity higher. It is also because rates are low in overnight market, they are parking at SDF," a dealer at a private bank said. Liquidity is expected to increase further Friday, after inflows from the INR-500-billion open market operation auction on Thursday and the first-leg settlement of the $10 billion, three-year dollar-rupee buy-sell swap auction conducted on Wednesday. Therefore, a few traders also expect announcement of a variable rate reverse repo auction.

 

At 0950 IST, the three-day call rate was at 5.05%, unchanged from Thursday's one-day close of 5.05%. The weighted average call rate was also 5.10%, compared to 5.03% on Thursday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 4.30%, unchanged from the previous trading day.

 

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – rose to INR 2.12 trillion Thursday, up from INR 1.96 trillion Wednesday. Along with more funds parked at SDF, there was also coupon payments for T-bills, state bonds, a green bond, and 7.09% bond maturing in 2054, which boosted systemic liquidity. Also, there there were no major outflows scheduled from the system.

 

Market participants are keeping a close eye on Reserve Bank of India Governor Sanjay Malhotra's address at 1000 IST, wherein the governor will detail the decision of the Monetary Policy Committee's three-day meeting, dealers said. Traders do not expect the rate-setting panel to cut the repo rate, nor do they expect a change in the committee's stance to "accommodative." Malhotra's commentary and tone are expected to emphasise that the central bank will provide comfortable liquidity to the banking system. (Vaishali Tyagi and J. Navya Sruthi)

 

End

 

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

 

Edited by Tanima Banerjee

 

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