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Informist, Tuesday, Feb. 17, 2026

By Aaryan Khanna

NEW DELHI – The interbank call money rate ended near the Reserve Bank of India's standing deposit facility rate of 5.00% Tuesday, given the comfortable surplus liquidity in the banking system. The decline in the liquidity surplus from the previous day had little impact on rates as it did not increase demand from banks, dealers said.

The one-day call rate ended at 5.08%, against 4.60% Monday. The weighted average call rate was 5.08% Tuesday, similar to 5.09% Monday. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was at 4.83%, similar to 4.84% Monday.

The systemic liquidity surplus declined Monday as banks increased cash balances with the RBI to INR 8.06 trillion from INR 7.28 trillion Sunday. According to the latest data, the net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--was INR 2.59 trillion Monday, down from INR 3.18 trillion Sunday. Banks shored up their cash balances with the RBI in preparation for a decline in liquidity after payments to the government for goods and services tax, which are likely to drain over INR 1.5 trillion from the system, dealers said.

"If you do the math, the cash balance change and the decrease in liquidity surplus almost lines up," a dealer at a private-sector bank said. "It has no impact on the market. People are just shoring up cash this week before next week will see some leaner liquidity due to the GST outflows."

Traders no longer expect a variable rate reverse repo auction from the RBI this week despite the weighted average call money rate remaining near the lower end of the liquidity adjustment facility corridor. Dealers said the RBI's next action on short-term liquidity is only likely to come after the GST outflows take place. Any temporary tightness after the outflows Friday and Saturday is likely to lead to a rise in the call rate to near the repo rate of 5.25%. The government's month-end spending should bring liquidity back into a comfortable surplus by the end of the month, they said. 

OUTLOOK

On Wednesday, the two-day call money rate may open below the repo rate of 5.25% due to low demand for funds amid the surplus liquidity in the banking system. Money markets are shut Thursday for Shivaji Jayanti.

During the day, the call rate is expected to move in a range of 4.50-5.25%. Call money market rates may begin inching up later this week ahead of the outflows for GST payments to the government, dealers said. 

CALL RATE

5.08%--Tuesday's close for one-day loans

5.15%--Tuesday's open for one-day loans

4.60%--Monday's close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Below RBI's repo rate on comfortable systemic liquidity surplus

MUMBAI – The interbank call money rate was below the Reserve Bank of India's repo rate of 5.25% due to comfortable liquidity surplus in the banking system, dealers said. Dealers expect rates to remain at 5.15-5.20% during the first half of the day due to early demand for funds from primary dealerships.    

Systemic liquidity surplus declined Monday as banks increased cash balances with the RBI to INR 8.06 trillion from INR 7.28 trillion Sunday. According to latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was at INR 2.59 trillion Monday, down from INR 3.18 trillion Sunday.

At 0947 IST, the one-day call rate was 5.15%, up from Monday's close of 4.60%. The weighted average call rate was 5.15%, compared with 5.09% Monday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was still below the RBI's SDF rate at 4.87%, against 4.84% the previous trading day.  

Even though both call and tri-party repo rates were on the lower end of the liquidity adjustment facility corridor, rates rose slightly by around 10 basis points compared to a week ago. "Call rate inched up a little compared to last week as there were no major inflows and mutual funds are deploying funds in CD (certificates of deposit) market on attractive rates," a dealer at a private sector bank said. 

Most dealers also do not see the RBI coming up with a variable rate reverse repo, as outflows for goods and services tax payments are scheduled to start from Friday or before, as banks are shut Thursday for Chhatrapati Shivaji Maharaj Jayanti. "Once the GST outflows start, TREPS rate will be at 5% and call may be at repo rate or above," a dealer at a public sector bank said.     

"There may not be VRRR as RBI will let the surplus play out. RBI is also happy with current rates and as GST outflows start, it will move higher and that is what RBI wants," the dealer at the private sector bank said.  (J. Navya Sruthi)

End

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

Edited by Rajeev Pai

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