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Informist, Thursday, Feb. 26, 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% Thursday due to the robust liquidity surplus, dealers said. Demand for funds from primary dealerships early in the day and a slight outflow had driven up the call money rate to near the repo rate of 5.25%.

The one-day call rate ended at 4.75%, ending at the same rate for the third day. The weighted average call rate was 5.08%, the same as on Wednesday. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was 4.90%, similar to 4.89% Wednesday.

According to the latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was INR 2.25 trillion Wednesday, down from INR 2.34 trillion Tuesday. Payments for the state bond auction Tuesday worth over INR 450 billion weighed on the liquidity surplus but was offset by a slight reduction in banks' cash balances with the RBI as well as some government spending, dealers said.

"We are also a bit confused how liquidity so high," a dealer at a state-owned banks said. "Everyone is talking about government spending, but we are not sure. It could be there since government had a large cash balance and will have to spend by March."

Traders also traded four-day term money cheaply, near the 5.00% SDF rate, despite the overhang of the end of the reporting fortnight on Saturday. Dealers do not expect rates to harden Friday especially with more government spending expected and with most banks likely to meet their cash reserve ratio requirements for the Feb. 28 reporting fortnight comfortably. Cash balances with the RBI on Wednesday were INR 7.32 trillion, down from INR 7.38 trillion Tuesday. Even with the reduction, average cash balances with the RBI between Feb. 15 and Wednesday were INR 7.71 trillion, higher than the regulated minimum average of INR 7.66 trillion for the fortnight ending Saturday.

OUTLOOK

On Friday, the three-day call may open below the RBI's repo rate of 5.25% owing to the comfortable liquidity surplus in the banking system. During the day, the call money rate is expected to move in a range of 4.80-5.50%.

No major inflows or outflows are expected Friday, with the government's spending expected to add to banking system liquidity, dealers said. This is likely to keep money market rates benign even if banks' demand for funds increases ahead of the end of the reporting fortnight Saturday.

CALL RATE

4.75%--Thursday's close for one-day loans

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

4.75%--Wednesday'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

MUMBAI – The interbank call money rate was below the Reserve Bank of India's repo rate of 5.25% Thursday as liquidity in the banking system remained above INR-2-trillion level, dealers said. They expect the call rate to trade near the RBI's Standing Deposit Facility of 5.00% during the day once the early demand for funds has been met.

At 0935 IST, the one-day call rate was 5.15%, up from Wednesday's close of 4.75%. The weighted average call rate was 5.15%, compared with 5.08% Wednesday. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 4.86%, slightly lower from 4.89% the previous day. The tri-party repo rate opened at 4.88% for the second consecutive day due to low demand for funds, dealers said. 

"We were expecting call to open at the same level as there are usually PDs (primary dealerships) on the borrowing side during morning," a dealer at a private bank said. "Overnight liquidity and system liquidity is still ample and rates are seen down for today (Thursday)," the dealer said.   

According to the latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was INR 2.25 trillion Wednesday, down from INR 2.34 trillion Tuesday. Cash balances with the RBI on Wednesday were INR 7.32 trillion, down from INR 7.38 trillion Tuesday, against the average daily requirement of INR 7.66 trillion for the fortnight ending Saturday.

Dealers expect the government's month-end spending to start by Friday and the systemic liquidity to rise above the INR-3-trillion level. However, they do not see the central bank announcing a variable rate reverse repo auction due to scheduled outflows during the second fortnight of March. Usually, INR 3 trillion worth of outflows for goods and services tax payments and advance tax payments happen during the second-half of March, when rates also tend to rise.  (J. Navya Sruthi)

End

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

Edited by Akul Nishant Akhoury

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