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Informist, Wednesday, Feb. 18, 2026

By Vaishali Tyagi

NEW DELHI – The interbank call money rate ended near the Reserve Bank of India's standing deposit facility rate of 5.00% Wednesday, given the comfortable surplus liquidity in the banking system. 

The two-day call rate ended at 5.08%, flat against 5.08% on Tuesday. The weighted average call rate was at 5.07%, similar to Tuesday's 5.08%. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was at 4.89%, against 4.83% Tuesday.

"People are borrowing in TREPS, so volume in call market is not more than 14,000 crore (INR 140 billion) since the RBI had conducted two 90-day VRRs (variable rate repo auctions). Banks are borrowing in TREPS and parking at SDF because of which SDF is at almost (INR) 4 trillion every day. So, I don't think the liquidity we are seeing every day is the actual liquidity," a dealer at a major state-owned bank. "We will have a clarity about liquidity only after GST outflows," the dealer said. 

Dealers expect INR 1.5 trillion to INR 1.8 trillion worth of outflows for goods and services tax payments. "Once GST outflows are done, TREPS rate will move to 5% and liquidity will also reduce to INR 1 trillion or below. I also expect banks will fund at (RBI's) SDF will also fall to INR 1.5 trillion after GST outflows," the dealer said.

The dealer expects systemic liquidity to be around INR 1 trillion or below after the outflows for GST payments. A few dealers now expect the RBI to bring another longer tenure VRR next week after outflows for GST payments. "If liquidity falls to INR 1 trillion or below, then there is no option but to announce a VRR or another OMO to keep rates near repo," the dealer said.   

According to latest data, the net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--was at INR 2.62 trillion Tuesday, up from INR 2.59 trillion Monday. On Tuesday, there was INR 19.74 billion worth of inflows for coupons and redemption of state bonds.    

OUTLOOK

On Thursday, money markets are shut for Shivaji Jayanti. On Friday, the three-day call will open near the RBI's repo rate of 5.25% due to outflows for GST payments, dealers said. During the day, the call rate is expected to move in a range of 5.00-5.25%.

CALL RATE

5.08%--Wednesday's close for two-day loans

5.15%--Wednesday's open for two-day loans

5.08%--Tuesday'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 as systemic liquidity surplus rises

MUMBAI – The interbank call money rate was below the Reserve Bank of India's repo rate of 5.25% as the liquidity surplus in the banking system rose Tuesday due to coupon payments and redemption of state bonds, dealers said. Dealers expect rates to remain at 5.15-5.20% during the first half of the day as loans are for two days, with money markets shut on Thursday for Chhatrapati Shivaji Maharaj Jayanti.    

According to latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was at INR 2.62 trillion Tuesday, up from INR 2.59 trillion Monday. On Tuesday, there was INR 19.74 billion worth of inflows for coupons and redemption of state bonds. 

At 0931 IST, the two-day call rate was 5.15%, up from Tuesday's close of 5.08% for one-day loans. The weighted average call rate was 5.15%, compared with 5.08% Tuesday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was still below the RBI's SDF rate at 4.91%, against 4.83% the previous trading day.  

The two-day call rate rose to 5.20% due to demand for funds before the holiday. However, dealers said there was only one trade at this rate and expect rates to remain on the lower side of the liquidity adjustment facility corridor during the day due to comfortable liquidity.  

"There is enough liquidity with all banks and so demand is not picking up. I am just doing 30-40% of daily volume as there is no demand," a dealer at a state-owned bank said. "Ideally, they (RBI) should come up with a VRRR (variable rate reverse repo), but I don't think they'll bring one as RBI is comfortable with current call rate," the dealer said.  

Dealers do not expect the RBI to come up with a VRRR as outflows for goods and services tax payments are scheduled to start on Friday. They expect outflows of INR 1.5 trillion to INR 1.8 trillion for GST payments. However, the government's month-end spending should bring liquidity back into a comfortable surplus, dealers said. (J. Navya Sruthi)

End

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

With inputs from J. Navya Sruthi

Edited by Akul Nishant Akhoury

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