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Informist, Tuesday, Feb. 10, 2026

By Aaryan Khanna

MUMBAI – The interbank call money rate ended well below the Reserve Bank of India's Standing Deposit Facility rate Tuesday due comfortable liquidity surplus in the banking system, dealers said. The call money rate had opened above 5.00% but fell below the SDF rate, as expected, after primary dealerships met their borrowing requirements.

The one-day call rate ended at 4.45%, against 4.40% Monday. The weighted average call rate was 5.02% Tuesday, similar to 5.03% the previous day. The weighted average rate in the broader tri-party repo market, which includes mutual funds, rose to 4.40% from 4.27% Monday.

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – rose to INR 3.11 trillion Monday from INR 2.97 trillion Sunday. The surplus rose as banks reduced their cash balances with the central bank, parking them at the SDF window. There were no major inflows or outflows Tuesday beyond the repayment of a state bond, with market dynamics similar to both Friday and Monday, dealers said. 

"Since the RBI is also not doing anything and liquidity is in such a surplus, banks are taking advantage of low rates in the TREPS (triparty repo) market," a dealer at a state-owned bank said. "The mutual funds don't have access to SDF, so they are ready to lend at any rate possible for them."

Liquidity in the banking system has risen to a surplus of over 1% of banks' net demand and time liabilities since Friday after the settlement of the latest round of the RBI's open market bond purchases and a $10 billion dollar-rupee buy-sell swap. Traders were consistently concerned about the possibility of a variable rate reverse repo auction by the RBI after Governor Sanjay Malhotra said Friday that the central bank aims for the weighted average call rate--the operating target of monetary policy--to be near the repo rate of 5.25%.

OUTLOOK

On Wednesday, the one-day call money rate may open near the Standing Deposit Facility rate of 5.00% due to low demand for funds amid the surplus liquidity in the banking system. During the day, the call money rate is expected to move in a range of 4.25-5.15%.

The settlement of the state bond auction worth INR 476.20 billion may reduce the liquidity surplus Wednesday. Rates are also seen inching up by Friday as banks look to meet cash reserve requirements at the end of the reporting fortnight, dealers said.

CALL RATE

4.45%--Tuesday's close for one-day loans

5.10%--Tuesday's open for one-day loans

4.40%--Monday's close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near RBI's SDF rate on comfortable systemic liquidity surplus

MUMBAI – The interbank call money rate was near the Reserve Bank of India's Standing Deposit Facility rate of 5% due to comfortable systemic liquidity surplus, dealers said. 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 3.11 trillion Monday from INR 2.97 trillion Sunday.

At 0933 IST, the one-day call rate was at 5.10%, up from Monday's close of 4.40%. The weighted average call rate was also 5.10%, compared to 5.03% on Monday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 4.32%, against 4.27% the previous trading day. 

Although inflows from open market operations auction and dollar-rupee buy-sell swap boosted the system's liquidity Friday to the highest level since Aug. 6, outflows of around INR 500 billion for excise duty pushed the liquidity below INR 3 trillion Sunday. However, systemic liquidity increased on Monday as cash balances with the RBI fell and banks parked more money at the SDF.  

According to the RBI's money market operations for Monday, cash balances with the RBI were INR 7.25 trillion, down INR 290 billion from INR 7.54 trillion Sunday. The average daily cash reserve requirement for the fortnight ending Feb. 15 is INR 7.52 trillion. The SDF balance with the central bank was also up at INR 4.52 trillion Monday from INR 3.66 trillion Sunday.    

Dealers see call and tri-party repo market rates lower during the day and trade in a range similar to that of Monday due to lack of major outflows and inflows. The call rate may fall below the RBI's SDF rate after early demand for primary dealerships has been met.  End

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

Edited by Akul Nishant Akhoury

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