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Informist, Friday, Feb. 27, 2026

By J. Navya Sruthi and Cassandra Carvalho 

MUMBAI – The interbank call money rate ended near the Reserve Bank of India's standing deposit facility rate of 5.00% Friday due to demand for funds to meet three-day loan and reporting fortnight requirements, dealers said. The three-day call rate ended above the SDF rate at 5.12% for the first time since Feb. 18 and at the highest closing level since Jan. 29. On Thursday, the one-day call money rate had closed at 4.75%.

"Month-end expenses, loans for three days, and CRR (Cash Reserve Ratio) maintenance kept rates slightly higher than yesterday (Thursday)," a dealer at a state-owned bank said. The weighted average call rate was 5.11%, up from 5.08% Thursday. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was 4.93%, slightly up from 4.90% Thursday.

According to the latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was INR 2.11 trillion Thursday, slightly down from INR 2.25 trillion Wednesday. Cash balances with the RBI on Thursday were INR 7.33 trillion, up from INR 7.32 trillion Wednesday, against the average daily requirement of INR 7.66 trillion for the fortnight ending Saturday.

Friday, there were inflows worth INR 800 billion to INR 1 trillion for the government's month-end spending on pensions and salaries, the dealer said. Dealers expect the inflows to continue over the weekend. Most dealers expect the systemic liquidity to rise above the INR-3-trillion level on inflows for government spending.

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 call money rates also tend to rise.

"Going into March, now rates will be on the higher side only, but by that I mean they'll become normal. Call rate will be near repo, because in March banks will look to improve their credit growth and there are outflows also," a dealer at a private sector bank said. "But after March, rates will cool off again in the new financial year."

OUTLOOK

Money markets are shut Saturday. On Monday, the one-day call may open below the RBI's SDF rate of 5.00% owing to the comfortable liquidity surplus in the banking system after the month-end inflows over the weekend. During the day, the call money rate is expected to move in a range of 4.75-5.25%.

CALL RATE

5.12%--Friday's close for three-day loans

5.20%--Friday's open for three-day loans

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

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near RBI's SDF rate on ample liquidity surplus, no major outflows

MUMBAI – The interbank call rate for three-day loans was near the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to ample liquidity surplus in the banking system, dealers said. Lack of major outflows scheduled for the day will mostly keep the call rate near the RBI's SDF rate, dealers said. 

At 0950 IST, the three-day call rate was at 5.10%, up from Thursday's close of 4.75% for one-day loans. The weighted average call rate was 5.19%, compared with 5.08% Thursday. According to the latest data, the net liquidity absorbed from the banking system by the RBI -- a proxy for the liquidity surplus -- was INR 2.11 trillion Thursday, slightly down from INR 2.25 trillion Wednesday. 

"We were expecting the government's month-end spending to start yesterday (Thursday) but that didn't happen. So, there have been few outflows corresponding to no inflows yet," a dealer at a major state-owned bank said. The weighted average call rate is expected to remain in line with Thursday's rate as most banks have met the reporting fortnight requirements, dealers said. Cash balances with the RBI on Thursday were INR 7.33 trillion, up from INR 7.32 trillion Wednesday, against the average daily requirement of INR 7.66 trillion for the fortnight ending Saturday.

However, the tri-party repo rate opened near the RBI's SDF rate due to fewer lenders in the market, dealers said. The tri-party repo rate opened at 4.94%, the highest since Feb. 17, and was at 4.96% at the time of writing the copy. The weighted average rate in the wider tri-party repo market, which includes mutual funds, was 4.94%, slightly higher from 4.90% the previous day.

A dealer at another state-owned bank said the tri-party repo rate is likely to be higher than the previous day due to month-end redemption pressure faced by mutual funds. Other dealers said fund requirements for three days will keep rates in the tri-party repo market slightly higher.     

Dealers expect the government's month-end spending inflows for pensions and salaries to start Friday and continue over the weekend. They expect 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 Ashish Shirke

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