More Stories

Informist, Saturday, Feb. 21, 2026

By J. Navya Sruthi

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 low demand for funds. 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 4.65%, down from Friday's close of 5.00% for three-day loans. The weighted average call rate fell to 4.72% from 5.11% Friday. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was also down at 4.82% from 4.94% Friday.

Although rates were comparatively lower than Friday, the weighted average rate of the tri-party repo market was higher than the call market. In fact, the last trade in the tri-party repo market was at 5% due to outflows for goods and service tax payments. 

During the day, the tri-party repo rate rose above the RBI's repo rate to 5.30%. However, dealers said it was a one-off amid low volume in the market. "It was a small deal. There must have been urgent requirement for funds and, with low volume in the market, someone must have quoted at this rate," a dealer at a state-owned bank said. 

There were outflows of INR 800 billion to INR 900 billion for goods and services tax payments on Saturday, the dealer said. "There were few yesterday (Friday), almost 20-30,000 crores (INR 200 billion to INR 300 billion)," the dealer said. So far there have been INR 1.2 trillion outflows from the banking system for GST payment. The remaining outflows towards GST are expected to be completed by Monday. Market participants expect a total of INR 1.5 trillion to INR 1.8 trillion for GST payments.   

According to the latest data, the net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--was at INR 2.45 trillion Thursday, down from INR 2.52 trillion Wednesday due to outflows for GST payments. Systemic liquidity on Thursday was the lowest since Feb. 6.  

Market participants also expect liquidity in the banking system to fall to INR 1.4 trillion or below after outflows for GST. The market is divided about whether this fall in liquidity will lead the RBI to announce a variable repo rate to support the systemic liquidity and keep rates near repo.

Some dealers expect the RBI to announce another long-term VRR next week after outflows for GST payments, while a few also expect the central bank not to take any action as the month-end inflows through government spending will start from Thursday. "If it is March, then I would have expected the RBI to come up with VRR, but now I don't see a need for this," a dealer at another state-owned bank said.

"Cash balances are higher than required and there are no other major outflows for this month," the dealer said. Cash balances with the RBI as on Thursday were INR 7.91 trillion, against the requirement of INR 7.66 trillion for the fortnight ending Feb. 28. 

Now those who see a VRR auction coming expect the liquidity to fall to as low as INR 1 trillion or even lower, as they expect funds parked by banks at SDF to reduce as the arbitrage differential between TREPS and the SDF will reduce. Dealers said the market is taking advantage of lower rates in tri-party repo market, borrowing at a cheaper rate of 4.80% or below, and parking at the RBI's SDF.

According to the RBI's daily money market operations, banks parked INR 3.23 trillion Thursday, against INR 3.71 trillion Sunday. Dealers expect this amount to further fall to around INR 2 trillion, which will also pull down the systemic liquidity. 

OUTLOOK

On Monday, the one-day call money rate may open near the RBI's repo rate of 5.25% due to demand for funds amid outflows for GST payments. During the day, the call money rate is expected to move in a range of 4.90-5.25%. 

The surplus liquidity in the banking system is expected to have fallen below INR 2 trillion Saturday, after around INR 1.2 trillion outflows for GST payments during Friday and Saturday. Dealers see Friday's liquidity to remain near the INR-2-trillion mark.

CALL RATE

4.65%--Saturday's close for two-day loans

4.70%--Saturday's open for two-day loans

5.00%--Friday's close for three-day loans

End

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

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.