More Stories

Informist, Monday, Mar. 16, 2026

 

By Aaryan Khanna, Durgesh Nandan and Shumaila Firoz

 

NEW DELHI – The interbank call money rate ended above the Reserve Bank of India's repo rate of 5.25% for the first time since Jan. 29. The liquidity drain from bulk of the advance tax outflows Monday turned even state-owned banks, usually flush with cash, to turn to the borrowing side in the call and triparty repo markets, dealers said.

 

The one-day call rate ended at 5.35%, sharply up from 5.15% for three-day loans Friday. The intraday high of 5.45% was also the highest in three weeks. The weighted average call rate was 5.31%, sharply higher than 5.10% Friday. The weighted average rate in the tri-party repo market was 5.18%, up from 5.04% Friday.

 

Traders said outflows between INR 700 billion and INR 1.5 trillion took place Monday for payments to the government for advance tax in March. While the advance tax had accrued to collecting banks over the past few sessions, most of these banks paid it to the government Monday. Earlier, outflows worth INR 200 billion to INR 300 billion had taken place, dealers said.

 

"Today, around INR 1.25-trillion outflows likely took place for advance tax," a dealer at a private-sector bank said. "There is sufficient liquidity in the system but pressure will remain for this week. Nobody in the market expects to get below SDF (Standing Deposit Facility) rates except for brief periods if government spending comes in."

 

The early pressure from the payments pushed up the call money rate to near the Marginal Standing Facility rate of 5.50%, especially with the routine demand from primary dealerships for funding their fixed income positions remained in the market, dealers said. Some of the outflows were offset by the settlement of the RBI's open market operation auction worth INR 500 billion. However, the inflow was not broad-based as the liquidity went into the hands only of the successful bidders at the auction, which were likely state-owned banks, dealers said.

 

Some traders were expecting the RBI to announce a variable rate repo auction during the day after money market rates spiked above the repo rate, while others said the auction is more likely later this week. Traders expected the RBI to conduct an auction to temporarily infuse at least INR 1 trillion into the banking system, for a period between three and 14 days, due to goods and services tax outflows likely to drain over INR 1.6 trillion from the banking system by Friday or early next week, dealers said. The central bank announced a VRR auction on expected lines after the market hours.

 

OUTLOOK

On Tuesday, the one-day call money rate is likely to open near the RBI's repo rate of 5.25% as the liquidity surplus in the banking system declines after payments for advance tax on personal incomes and corporations. The one-day call money rate is seen in a range of 4.75-5.45% through the day.

 

After the market hours on Monday, the RBI announced it would conduct a seven-day, INR 1.50-trillion VRR auction at 0930-1000 IST Tuesday, the first VRR auction since Jan. 30. This will likely keep the call money rate capped near the RBI's repo rate. The auction will only reverse after the goods and services tax outflows conclude and is likely to be heavily subscribed, dealers said. More liquidity infusion measures are expected to ease money market rates near the quarter- and financial year-end in March.

 

CALL RATE

5.35%--Monday's close for one-day loans

5.20%--Monday's open for one-day loans

5.15%--Friday's close for three-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.38	5.13
3-day	--	--
14-day	5.92	5.88
1-month	6.97	6.95
3-month	7.00	6.97

 

---

India Call: Above repo, at nearly one-month high on advance tax outflows

 

MUMBAI – The one-day interbank call money market rate was above the Reserve Bank of India's repo rate Monday, hitting 5.45%, the highest since Feb. 24, amid outflows due to advance payments for income tax and corporation tax, dealers said. Some dealers expect the RBI to conduct a variable rate repo auction Monday during market hours itself, while others said that settlement of the INR-500-billion open market operations auction conducted Friday will offset some of the outflows, they said.  

 

At 1024 IST, the one-day call rate was 5.35%, up from 5.15% for three-day loans Friday. The weighted average call rate was 5.40%, up from 5.10% Friday. The weighted average rate in the tri-party repo market – which includes mutual funds – was 5.23%, from 5.04% Friday. The net liquidity absorbed by the RBI from the banking system – a proxy for systemic liquidity surplus – was INR 2.13 trillion Friday, down from INR 2.49 trillion Thursday. 

 

Of the around INR-1.50-trillion of outflows expected for advance tax payments, at least INR 1.00 trillion is likely to be paid Monday, dealers said. Some of the outflow expected during the day will be offset by the inflows from the RBI's open market operation auction, dealers said. Traders expect the RBI to announce a variable rate repo auction of around INR 1 trillion this week, though expectations of the tenure of such an operation varied. Outflows of around INR 1.80 trillion for goods and services tax payments will begin by end of the week. Money markets will be shut for two days this week, on Thursday and Saturday, for Gudi Padwa and Ramzan-Id, adding to the upward pressure on borrowing rates as banks provide for their requirements in advance, dealers said. 

 

"I don't think RBI will come up with VRR today (Monday) because liquidity is still in surplus, and the OMO money will come in today, but definitely for this week in the next two to three days he (RBI) will have to hold one," a dealer at a private sector bank said. The RBI has not held a VRR since it conducted two 90-day VRRs on Jan. 30. 

 

Rates in the triparty repo market also rose above the repo rate as some mutual funds turned borrowers due to banks withdrawing funds from them to pay taxes, dealers said. However, liquidity was still in ample surplus as of latest data, which limited the rise in rates, dealers said.  (Cassandra Carvalho)

 

End

 

US$1 = INR 92.42

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

 

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.