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Informist, Thursday, Apr. 2, 2026

By Durgesh Nandan

MUMBAI – The interbank call money rate for four-day loans ended at the Reserve Bank of India's standing deposit facility rate of 5.00% Thursday due to sufficient liquidity surplus and banks having adequate cash balances parked with the central bank at the start of the fortnight, dealers said. The call money market will remain closed Friday for Good Friday.  

The four-day call rate ended at 5.00% Thursday, sharply down from 7.00% for three-day loans Monday. Monday's closing level was the highest for the call market in a decade, ahead of the end of the financial year on Tuesday. Money markets were shut on Tuesday for Mahavir Jayanti and Wednesday due to banks' annual closing of accounts. The weighted average call rate was 5.20%, sharply down from 6.90% Monday.

 "Call rates were in a decent range today if we compare it with the previous closing (Monday closing) of 7.0% and look at the liquidity surplus in the system," a dealer at a large public-sector bank said.

As per the latest data, the net liquidity absorbed by the RBI, an indication of the liquidity surplus, was INR 1.85 trillion Wednesday, lower than INR 3.09 trillion Tuesday. Liquidity surplus fell as cash balances with the RBI for the fortnight ending Apr. 15 rose sharply to INR 8.99 trillion Wednesday from INR 7.60 trillion Tuesday. Effectively, the surplus remained near INR 3.00 trillion, leading to no pressure on money market rates to rise above the repo rate of 5.25%, dealers said.

Mutual funds were also flush with funds, as is usual at the beginning of the month, especially with demand for funds from banks collapsing, dealers said. The larger tri-party repo market rate closed at 3.60%. The weighted average rate in the tri-party repo market was 4.92%, sharply down from 6.16% Monday.

Early demand for funds from primary dealerships in the call market was met at the repo rate. Some banks also required funds due to the reversal of three quarter- and financial year-crossing variable rate repo auctions extended by the RBI, dealers said. In total, the reversal of the three auctions drained INR 1.50 trillion of short-term liquidity that the central bank had temporarily infused.

OUTLOOK
Financial markets are shut Friday for Good Friday. On Saturday, the two-day call money rate is likely to open below the RBI's repo rate of 5.25% as banks have met most of their borrowing requirements on Thursday, dealers said. As is usually the case on Saturdays, trade volume is likely to be muted. 

The two-day call money rate is seen in the 4.65–5.25% range during the day. Outflows for excise duty are scheduled for next week, which could drain the liquidity by around INR 600 billion by Wednesday. The RBI Monetary Policy Committee rate decision and commentary on Wednesday will also be closely watched, dealers said.

CALL RATE

5.00%--Thursday's close for four-day loans

5.25%--Thursday's open for four-day loans

7.00%--Monday's close for three-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: At RBI's repo rate on fund demand for reversal of VRR auctions

MUMBAI – Despite ample liquidity surplus in the banking system, the interbank call money rate for four-day loans was at the Reserve Bank of India's repo rate of 5.25% because of demand for funds due to reversal of three variable rate repo auctions, dealers said. The call rate and tri-party repo rate opened sharply down due to low demand for funds, dealers said.

The reversal of INR 1.5 trillion of transient liquidity infused through three VRR auctions earlier is due Thursday. Dealers expect the call rate and tri-party repo rate to cool down later during the day, given ample liquidity surplus and low demand for funds.   

At 0941 IST, the four-day call rate was 5.25%, sharply lower than 7.00% for three-day loans on Monday, and the weighted average call rate was also 5.25%, sharply lower than 6.90% Monday. The tri-party repo rate was 5.01%. The weighted average rate was 5.09%, sharply lower from 6.16% Monday. The tri-party repo rate opened below the RBI's repo rate due to lesser demand for funds, a dealer at another public sector bank said. Markets were shut on Tuesday and Wednesday on account of Mahavir Jayanti and banks' closing of accounts for the last financial year, respectively.

Banks have less demand for funds on Thursday, as most of the banks have enough liquidity and they have parked the amount at the RBI's standing deposit facility. "...If we compare the Mar. 31 (Tuesday) SDF amount with Mar. 30 (Monday), then we can see a huge difference between them, also banks did more than enough borrowing last (working) day (Monday) to fulfil their credit disbursement requirements, so they still have enough liquidity with them," a dealer at a public sector bank said. The only major outflow scheduled for this month is payment for goods and services tax, which is expected to be around INR 2 trillion, the dealer added.

The net liquidity absorbed by the RBI, an indication of the liquidity surplus, was INR 1.85 trillion Wednesday, lower than INR 3.09 trillion Tuesday. Liquidity surplus fell as cash balances with the RBI for the fortnight ending Apr. 15 rose sharply to INR 8.99 trillion Wednesday from INR 7.60 trillion Tuesday.

Reversal for three of the RBI's variable rate repo auctions, scheduled for Thursday, will drain liquidity. A few dealers expect inflows for the government's month-end spending of INR 1.5 trillion to 1.8 trillion this week, which will add to the existing liquidity surplus. (Durgesh Nandan) 

End

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

Edited by Deepshikha Bhardwaj

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