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Informist, Saturday, Apr. 4, 2026

By J. Navya Sruthi

MUMBAI – The two-day interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on Saturday due to low demand for funds. As is usually the case on Saturdays, trade volume was muted as most banks had met their funding needs on Thursday. Money markets were shut on Friday on account of Good Friday.  

The two-day call rate ended at 4.99%, slightly up from Thursday's close of 4.75% for four-day loans but the weighted average call rate fell to 4.78% from 5.20% Thursday. The weighted average rate in the broader tri-party repo market, which includes all Indian financial institutions, was at 4.38% from 4.92% Thursday.

Trade volume in the call money market was INR 33.18 billion, sharply down from INR 183.80 billion Thursday, and that in tri-party repo market was at INR 299.75 billion, massively down from INR 4.55 trillion the previous day.

Liquidity surplus, which is the net liquidity absorbed by the RBI from the banking system was INR 1.85 trillion Wednesday, down from INR 3.09 trillion Tuesday, as per data from the central bank. Liquidity surplus fell as banks increased their cash balances with the RBI to INR 8.99 trillion Wednesday from INR 7.60 billion Tuesday. The average daily cash reserve requirement for the fortnight ending Apr. 15 is INR 7.76 trillion. 

Dealers expect liquidity surplus in the banking system to rise by INR 500 billion to INR 700 billion on Friday due to inflows of month-end government expenditure. With no major outflows scheduled for next week, dealers expect rates to remain largely below the RBI's repo rate for the week. 

"We might see a VRRR (variable rate reverse repo auction) now as rates are low and there is also ample surplus," a dealer at a state-owned bank said. "But in March when liquidity was (INR) 3 trillion, then RBI did not conduct one, so there are also chances for RBI to to just wait and watch. Even if there is no VRRR it will still not be a problem," the dealer said.

Outflows of INR 290 billion for gilt auction payment are scheduled for Monday. These outflows are unlikely to impact overnight rates as banks have already made provisions for the payments and there is enough liquidity surplus in the market. "There is liquidity of (INR) 3 trillion now, so (INR) 290 billion going out will not matter much," a dealer at a large public sector bank said.

OUTLOOK

On Monday, the one-day call money rate is likely to open below the RBI's repo rate of 5.25%, but above Thursday's close of 4.75% due to early demand for funds from primary dealerships. During the day, the call rate is likely to fall below the RBI's Standing Deposit Facility rate of 5.00% due to comfortable liquidity surplus in the banking system. During the day, the call money rate is expected to move in a range of 4.90-5.15%. 

Dealers expect the tri-party repo rate to remain below the RBI's SDF rate. Traders will track the liquidity figures amid outflows for payments of excise duty and tax deducted at source on Tuesday.

CALL RATE

4.99%--Saturday's close for two-day loans

4.85%--Saturday's open for two-day loans

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

End

With inputs from Divya Moolayattil

Edited by Tanima Banerjee

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