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Informist, Wednesday, Mar. 11, 2026

 

By J. Navya Sruthi

 

MUMBAI – The one-day interbank call money rate ended steady Wednesday while the tri-party repo rate ended higher as mutual funds faced redemption pressure, dealers said. They expect the call rate and tri-party repo rate to increase on Thursday as the reporting fortnight neared its close and outflows for advance tax payments on income tax and corporation tax. 

 

"Mutual funds have faced redemption pressure and they sold short-term papers. Rates were on the higher side in the short-term market, and the TREP's rate was up in the second half," a dealer at a state-owned bank said. The short-term and TREP market rates are likely to rise Thursday, with mutual funds likely to take advantage of the current scenario and lend at higher rates in the market, the dealer said.

 

The one-day call rate ended at 4.75%, unchanged from Tuesday. The weighted average call rate increased marginally to 5.08% Wedneday from 5.07% the previous day. The tri-party repo rate ended at 4.99%, up from 4.60% Tuesday. However, the weighted average rate in the tri-party repo market was unchanged from Tuesday at 4.80%. 

 

Although there is demand for funds, dealers do not expect the tri-party repo rate to rise above the Reserve Bank of India's Standing Deposit Facility rate of 5.00% this week, given comfortable liquidity in the banking system. The net liquidity absorbed by the RBI from the banking system was INR 2.74 trillion Tuesday, up from INR 2.19 trillion Monday.

 

Liquidity rose 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 Monday. 

 

A dealer at another state-owned bank said the call rate is expected to open at around 5.20% on Friday, as it is the last working day of the current fortnight. 

 

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

 

OUTLOOK

The one-day call rate is likely to open at 5.15-5.18% on Thursday, driven by demand for funds as the reporting fortnight neared its close and for payments of advance tax on income tax and corporation tax. However, the call rate is expected to decline as the day progresses due to ample liquidity in the banking system. The weighted-average call rate is likely to be around 5.10% Thursday. Dealers see the call rate at 4.75-5.20% Thursday. 

 

On Thursday, there will be outflows of INR 375 billion for payments for treasury bills auctioned and inflows of around INR 413 billion from redemptions of treasury bills and coupon payments on state government bonds. 

 

CALL RATE

4.75%--Wednesday close for one-day loans

5.15%--Wednesday open for one-day loans

4.75%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.13	5.12
3-day	--	--
14-day	5.84	5.82
1-month	6.89	6.79
3-month	6.92	6.87

---

India Call: Rises on early demand for funds; seen falling on ample liquidity

 

MUMBAI – The one-day interbank call money rate rose Wednesday due to early demand for funds from primary dealerships, dealers said. The rate rose above the Reserve Bank of India's Standing Deposit Facility rate of 5.0% in early trade, as has been the trend for the past few days. Dealers expect the call rate to fall later in the day once the demand for funds is met. The rate is expected to close below the SDF rate Wednesday, as has been happening for the last few weeks.

"Call rate is fixed at 5.15% now for more than a week. In TREPs (tri-party repo rate) it is clearly visible that there is enough liquidity," a dealer at a state-owned bank said. The net liquidity absorbed by the RBI from the banking system was INR 2.74 trillion Tuesday, up from INR 2.19 trillion Monday. Liquidity rose Tuesday due to inflows of INR 500 billion through the RBI's open market operations auction Monday. 

 

At 0930 IST, the one-day interbank call rate was at 5.15%, up from 4.75% Tuesday. The weighted average call rate was at 5.15%, also higher than the average of 5.07% Tuesday. The weighted average rate in the tri-party repo market, where all Indian financial institutions participate, was 4.84%, up from 4.80% Tuesday. 

Dealers said payments of advance tax have already started this week and the deadline is Sunday. "We have seen 200 to 300 crores (INR 2 billion to INR 3 billion) payments yesterday (Tuesday) from our bank," the dealer at the state-owned bank said.  

 

The call rate continued to be below the Reserve Bank of India's repo rate of 5.25% as liquidity surplus in the banking system rose Tuesday. Liquidity is expected to stay comfortable as the central bank had earlier announced open market operations auction to buy INR 1 trillion of bonds.

 

Dealers said the RBI is unlikely to conduct a variable rate repo auction this week as there is enough liquidity in the banking system despite these outflows. "We may have one (VRR) next week, but now rates are steady. They will be slightly up, around 5.20-5.25%, tomorrow (Thursday) and Friday, but that can be managed," the dealer at the state-owned bank said. 

 

Another dealer from a small finance bank said a VRR auction is unlikely this month but there may be one by April end, when the two 90-day VRRs will mature. In January, the central bank infused INR 1.17 trillion transient liquidity through two 90-day VRR auctions to support the liquidity in the banking system. "Very much surplus in liquidity right now and equity markets are also reversing. So I don't think there is any need for VRR now," the dealer said. (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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