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Informist, Tuesday, Mar. 10, 2026

By J. Navya Sruthi

MUMBAI – The one-day interbank call money rate Tuesday ended sharply below the previous day's close and the Reserve Bank of India's Standing Deposit Facility rate due to ample liquidity with banks, dealers said. However, one-month Mumbai Interbank Outright Rates rose from the previous day due to higher borrowing in anticipation of higher rates during the second fortnight of March, dealers said.   

The one-day call rate ended at 4.75%, down from 5.07% Monday. The weighted average rate was at 5.07%, unchanged from the previous day. The weighted average rate in the tri-party repo market was lower at 4.80%, from 4.86% Monday. 

The volume in term money increased due to higher borrowing requirements by primary dealerships ahead of the call rate rising next week, on account of outflows for tax payments. "This is purely quarter-crossing premium as rates are likely to be higher last week of the month (March), they are covering it this week," a dealer at a private sector bank said.  

The one-month MIBOR rate was at 6.79% Tuesday, up 23 basis points from the previous day, which was the highest since Apr. 8. Volume in the 30-day term money was INR 1.5 billion, down from INR 4 billion Monday, but still higher than the INR-250-million volume seen on Jan. 21. Volume in 20-day term money was INR 7.5 billion, up from INR 1.0 billion on Mar. 4. The 20-day term money was at 5.90% Tuesday, up from 5.85% on Mar. 4.  

Dealers expect around INR 1.5 trillion in outflows for advance tax payments on income tax and corporation tax, for which the deadline is on Mar. 15. In addition, around INR 1.7 trillion in outflows for goods and services tax payments are also scheduled next week. 

Most dealers from public-sector banks expect a variable-rate repo auction this week, before outflows for tax payments start on Monday. On the other hand, dealers from private-sector banks said that it is too early for a VRR auction, as liquidity in the banking system is already comfortable. "Thursday will be the correct day to judge if we need one (VRR auction) or not. Given current rates, how will RBI justify a VRR?" a dealer at a primary dealership said.    

Those who expect a VRR this week said that the central bank will likely announce a six-day or seven-day variable rate repo auction for INR 500 billion to support liquidity. A dealer at another primary dealership said the RBI is expected to announce a VRR auction for INR 1 trillion.       

The net liquidity absorbed by the RBI from the banking system - a proxy for the liquidity surplus – was INR 2.19 trillion Monday, down from INR 2.41 trillion Sunday, as per the latest data. Dealers expect the liquidity surplus to rise to INR 2.5 trillion Tuesday due to inflows of INR 500 billion from the RBI's open market operations auction Monday. The second tranche of the RBI's INR 1 trillion OMO auction is due Friday and inflows of INR 500 billion will be seen on Mar. 16. 

OUTLOOK

The one-day call rate is likely to open at a similar level to Tuesday's, given ample liquidity in the banking system. It is expected to open higher than Tuesday's close, owing to early demand for funds from primary dealerships. Dealers see the call rate at 5.13-5.15% Wednesday. They expect the weighted average call rate to be at or below 5.09% due to the lack of major outflows during the day. 

CALL RATE

4.75%--Tuesday close for one-day loans

5.15%--Tuesday open for one-day loans

5.07%--Monday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Slightly up but still below RBI repo rate on ample liquidity

MUMBAI – The one-day interbank call money rate was slightly higher Tuesday as the reporting fortnight neared its close, but it was still below the Reserve Bank of India's repo rate of 5.25% due to comfortable liquidity in the banking system, dealers said. They expect the rate to fall below the central bank's Standing Deposit Facility rate of 5.00% later in the day due to inflows of INR 500 billion through the RBI's open market operations auction Monday. 

"We were expecting it (call rate) to open at the same level because of liquidity. TREPS (tri-party repo rate) opened slightly higher (by 8 basis points) because only three working days are left (in the fortnight) and banks are borrowing to maintain cash reserves and also to meet the requirement for advance tax payments," a dealer at a state-owned bank said. "During the day, weighted average call rate will be near SDF (Standing Deposit Facility), same as yesterday (Monday) and same can be seen in TREPs," the dealer said.  

According to market participants, around INR 1.5 trillion outflows are expected for payments of advance tax for income tax and corporation tax, for which the deadline is Mar. 15. Some dealers said they expect the central bank to announce a six-day or seven-day variable rate repo auction for INR 500 billion this week to support liquidity. 

However, some other dealers said the RBI may not conduct a variable rate repo this week as there is enough liquidity in the banking system despite these outflows. "(The) overnight surplus is already around (INR) 3.5 trillion and after today's inflows we can expect liquidity surplus to be around (INR) 2.5 (trillion) to (INR) 3.0 trillion," a dealer at a private sector bank said. "I personally feel there is no need for a VRR now."   

At 0928 IST, the one-day call rate was 5.15%, up from 5.07% Monday. The weighted average call rate was also 5.15%, up from 5.07% the previous day. The weighted average rate in the broader tri-party repo market, which includes mutual funds, was 4.90%, slightly up from 4.86%.  

According to the latest data, the net liquidity absorbed by the RBI from the banking system was INR 2.19 trillion Monday, down from INR 2.41 trillion Sunday. Cash balances maintained by banks with the RBI were INR 7.47 trillion Monday, down from INR 7.53 trillion Sunday. Liquidity and cash balances were slightly down due to outflows of INR 290 billion for payment for the gilts that were auctioned Friday. There were also inflows of around INR 221 billion Monday on account of coupon payments and redemptions of state government bonds.  (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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