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Informist, Monday, Feb. 23, 2026

By Aaryan Khanna

NEW DELHI – The interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as market participants met their demand for funds in the first half of the day, dealers said. The prevailing liquidity surplus, despite outflows for goods and services tax payments, meant that large state-owned banks continued to lend in the call market and to cap money market rates. 

The one-day call rate ended at 4.60%, down from Saturday's close of 4.65% for two-day loans. The weighted average call rate was at 5.11%, the same as Friday but up from 4.72% Saturday. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was at 4.93% Monday, similar to 4.94% Friday and up from 4.82% Saturday. Money market volumes are normally muted on Saturdays.

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 1.74 trillion Sunday, down from INR 1.82 trillion Saturday and INR 2.27 trillion Friday. Sunday's liquidity surplus was the smallest since Feb. 2, largely due to payments to the government for GST, dealers said.

"I would say maybe another 50,000 crore (INR 500 billion) would have gone today (Monday)," a dealer at a state-owned bank said. "Most of it is being used from the surplus in SDF or through cash balances since people have built that up over the past few days."

Around INR 1.1 trillion in GST payments have already been processed on Friday and Saturday, with the remaining amount due on Monday, dealers said. Estimates for total outflows range from INR 1.5 trillion to INR 1.8 trillion, which will likely bring the RBI's net liquidity absorbed to around INR 1 trillion, they said.

However, banks are maintaining cash balances with the RBI in excess of the fortnightly requirement and may reduce this as the surplus in the standing deposit facility shrinks, dealers said. The shrinking liquidity surplus had led to the overnight call money rate rising to as high as 5.50%, the marginal standing facility rate, and the upper edge of the liquidity adjustment facility corridor, as banks asked for a higher interest rate to lend to primary dealerships.

OUTLOOK

On Tuesday, the one-day call may open near the RBI's repo rate of 5.25% amid increased demand for funds following GST outflows. During the day, the call money rate is expected to move in a range of 4.80-5.50%. Some participants expect the RBI to announce a variable rate repo rate auction of up to INR 250 billion to cool money market rates and prevent them from rising above the repo rate as liquidity surplus shrinks.

CALL RATE

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

5.18%--Monday's open for one-day loans

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near RBI's repo rate on demand for funds amid GST payments

MUMBAI – The interbank call money rate was near the Reserve Bank of India's repo rate of 5.25% Monday due to demand for funds amid outflows for goods and services tax payments, dealers said. They expect the rate to hover the central bank's repo rate because of scheduled outflows for the day.  

At 1015 IST, the one-day call rate was 5.18%, up from Saturday's close of 4.65% for two-day loans. The weighted average call rate was 5.18%, compared with 4.72% Saturday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was at 4.99%, also near the RBI's SDF rate at 5%, against 4.82% the previous trading day. Monday, the one-day interbank call money rate opened at 5.18%, which is the highest since Feb. 2, and similarly, the tri-party repo rate opened at 4.90%, the highest opening level since Feb. 11.

"Although the call opened near repo, it has eased now, which shows most outflows for GST were done on Friday and Saturday," a dealer at a small finance bank said. "I think weighted average call rate will ease to 5.15-5.16%, but MIBOR (Mumbai interbank offered rate) can be around 5.16%," the dealer said and added "we need to see how was the liquidity on Saturday to have an idea about what were actual outflows for GST."    

Friday's systemic liquidity was the lowest since Feb. 5 due to outflows 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 2.27 trillion Friday, down from INR 2.45 trillion Thursday due to outflows for GST payments. Cash balances with the RBI also fell to INR 7.84 trillion Friday from INR 7.91 trillion Thursday. The average daily cash reserve requirement for the fortnight ending Saturday is INR 7.66 trillion.  

Dealers said there were outflows of INR 800 billion to INR 900 billion for goods and services tax payments on Saturday and INR 200 billion to INR 300 billion on Friday. The remaining outflows towards GST are expected to be completed on Monday. Market participants expect a total of INR 1.5 trillion to INR 1.8 trillion for GST payments and see liquidity in the banking system at INR 1.4 trillion or below after outflows for GST.  (J. Navya Sruthi) End

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

Edited by Saji George Titus

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