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Informist, Saturday, Feb. 7, 2026

By Aaryan Khanna

MUMBAI - The two-day interbank call money rate ended well below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on Saturday due to surplus liquidity in the banking system. As is usual on Saturday, trade volume was muted as most banks had met their funding needs on Friday. 

The two-day call rate ended at 4.20% Saturday, lower than the three-day call rate of 4.45% Friday. The weighted average call rate was 4.55%, lower than 5.06% on Friday. The weighted average rate in the broader tri-party repo market was at 4.10%, down from 4.32% in the previous session.

According to the latest data, 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. Payments to the government for excise duty and tax deducted at source are expected to drain around INR 700 billion of liquidity by Monday after having surged Friday to the settlement of two RBI liquidity operations, dealers said. 

Traders had feared the central bank may announce a variable rate reverse repo operation for Monday to push up the weighted average call rate from near the SDF rate, which is the lower bound of the Liquidity Adjustment Facility corridor. RBI Governor Sanjay Malhotra Friday said the central bank aims to keep the weighted average call rate, the operating target of monetary policy, in line with the policy repo rate of 5.25%. However, the RBI has not conducted any VRRRs this week, even as the operating target fell below the SDF rate of 5.00% on Wednesday.

The governor's comments came after the Monetary Policy Committee 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'. Some traders were disappointed with the lack of liquidity infusion measures, while most said the banking system had no immediate need of liquidity infusion due to the sizeable surplus.

OUTLOOK

On Monday, the one-day call money rate may open below the RBI's repo rate of 5.25% due to low demand for funds amid surplus liquidity in the banking system. During the day, the call money rate is expected to move in a range of 4.50-5.25%.

The surplus liquidity in the banking system is expected to have risen to over INR 3.5 trillion Friday after the settlement of a $10-billion dollar-rupee buy-sell swap auction on Friday as well as the INR 500-billion open market operation auction by the RBI to buy bonds. The call money rate may rise to around the repo rate Monday for tax and excise duty payments, which are expected to drain around INR 700 billion of liquidity in total.

CALL RATE

4.20%--Saturday's close for two-day loans

4.20%--Saturday's open for two-day loans

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

End

US$1 = INR 90.66

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

Edited by Deepshikha Bhardwaj

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