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Informist, Thursday, Apr. 16, 2026

By Durgesh Nandan

MUMBAI – The one-day interbank call money rate ended above the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on Wednesday on late demand for funds from some banks to meet their daily requirements, dealers said. However, the tri-party repo rate was below the RBI's SDF rate on ample surplus liquidity and low demand for funds, dealers said. 

The one-day call rate ended at 5.10% Thursday, up from 5.08% Wednesday. The weighted average call rate was 5.09%, up from 5.08% Wednesday. Volume in the call money market was INR 205.14 billion, higher than INR 159.04 billion Wednesday. Primary dealers were major borrowers in the call-money market, but some small financial banks also borrowed to meet their requirements, dealers said.    

Volume in the call money market was higher, likely due to demand for funds from banks to maintain the statutory liquidity ratio requirements, dealers said. Banks preferred to use the call-money market to meet their funding requirements, despite the lower rate in the tri-party repo market.

"Everyone (banks) has enough securities with them, maybe they (banks) don't want to hold the securities, that's why they have preferred the call market over TREPs (tri-party repo market)," a dealer at a public-sector bank said. "Banks may have borrowed funds to meet their asset liability management."

The tri-party repo rate ended at 5.00%, flat from Wednesday. The weighted average rate in the tri-party repo market was 4.78%, also flat from the previous session. The volume in the tri-party repo market was INR 4.38 trillion, down from INR 4.46 trillion Wednesday. The tri-party repo market rate constantly traded below the RBI's SDF rate as mutual funds are flooded with cash, dealers said.      

According to the latest figures, the net liquidity absorbed by the RBI was INR 5.21 trillion on Wednesday, up from INR 5.13 trillion Tuesday. The surplus liquidity is above INR 5 trillion since Saturday. It was broadly steady due to lack of large inflows or outflows on Wednesday, dealers said. Dealers expect the liquidity will drain only after the payments for outflow of goods and services tax of INR 1.5 trillion–1.8 trillion starting next week. The surplus liquidity is likely to be around INR 3.0 trillion–INR 3.5 trillion after this outflow, which is also a comfortable position, dealers added. 

The central bank said it will conduct a seven-day variable rate reverse repo auction Friday for INR 2 trillion. Dealers expect the rates in overnight markets to rise slightly Friday. "The RBI has announced the VRRR today (Thursday) due to the number of inflows scheduled for Friday," a dealer at a public-sector bank said. Inflows of INR 527 billion are scheduled for maturity, redemption and coupon payments of government bonds and treasury bills.

The RBI had conducted the seven-day VRRR last week for INR 2 trillion and accepted the notified amount at the cut-off rate of 5.24%.

OUTLOOK

Friday, the three-day call money rate is likely to open at 5.10-5.15% on early demand for funds from primary dealerships and some banks, dealers said. Dealers expect the rate to be in the range of 4.60–5.15% during the day on the back of ample surplus liquidity in the banking system. The weighted average call rate is expected to be 5.05–5.15%, while the weighted average tri-party repo rate may be 4.80–4.90%, dealers said.

Due to surplus liquidity and low rates in overnight markets, the RBI will conduct second seven-day VRRR Friday for INR 2 trillion this month. On Friday, inflows of INR 527 billion for maturity, redemption and coupon payments are scheduled, which are likely to flush the surplus liquidity in the banking system. Reversal of INR 2 trillion for the three-day VRRR conducted last week is also scheduled for Friday.  

CALL RATE

5.10%--Thursday close for one-day loans

5.15%--Thursday open for one-day loans

5.08%--Wednesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Falls on surplus liquidity, low demand for funds from PDs, banks

MUMBAI – The interbank call money rate fell below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to surplus liquidity in the system and weak demand for funds, dealers said. The weighted average call rate was above the SDF rate due to the early demand for funds from banks and primary dealerships.

The one-day call rate had opened above the SDF rate but below the policy repo rate of 5.25% due to demand for funds from primary dealerships and some small finance banks, to roll over their investments. Some banks were also borrowing funds to meet requirements caused by a rise in credit given out. However, as this demand eased, the call money rate fell below the SDF rate. The call rate is expected to remain in the 4.60–5.15% range for rest of the day, dealers said.

At 1412 IST, the one-day call rate was 4.80%, down from the opening level of 5.15% and 5.08% at close Wednesday. The weighted average call rate was 5.10%, higher than 5.08% Wednesday. Trade volume in the call money market was INR 189.68 billion, which is higher than usual. Volume in the call money market till midday was higher than Wednesday's total volume of INR 159 billion due to demand for funds from banks to meet their daily credit outflow requirements, dealers said.

Banks preferred to use the call-money market to meet their funding requirements, despite the lower rate in the tri-party repo market. "...maybe banks don't have enough securities, but this should not be the case, or maybe they don't want to hold their securities, that's why they have preferred call (money-market) over TREPs (tri-party repo market)," a dealer at a public-sector bank said. While call is the unsecuritised money market, banks have to trade over securities to borrow cash in the tri-party repo market.

At 1412 IST, the tri-party repo rate was 4.74%, lower than the opening level of 4.84% and from Wednesday's close of 5.00%. The weighted average tri-party repo rate was 4.78%, unchanged from Wednesday. Sitting flush on cash, mutual funds were likely lending in the overnight money markets.

As per latest figures, the net liquidity absorbed by the RBI was INR 5.21 trillion Wednesday, above INR 5 trillion since Saturday. The amount is an indication of the liquidity surplus in the banking system. There were no large scheduled inflows or outflows on Wednesday, dealers said.

Most dealers do not see variable rate reverse repo being conducted Thursday, but were unsure whether the RBI would rollover the entire seven-day, INR 2.00 trillion liquidity absorption it had conducted Friday. Some expected a full rollover of the seven-day window, while others said the central bank may opt for a short-term VRRR auction of up to four days. Payments for the outflow of goods and services tax and government securities are scheduled for Monday, which is expected to drain the surplus liquidity in the banking system. Only after that the RBI would decide whether to bring another VRRR or not, a few dealers said.

"...If the RBI has waited till today (Thursday) when rates (overnight market rates) are down, then it's a rare chance for RBI to come with VRRR today, they may come up tomorrow or next week after monitoring the surplus liquidity in the system," the dealer said. (Durgesh Nandan)

India Call: Up on demand from PDs, small fin banks despite surplus liquidity

MUMBAI – The interbank call money rate Thursday was higher than Wednesday's closing level on usual demand for funds from primary dealerships and some small finance banks to meet daily cash requirements early in the day, dealers said. However, the call rate was below the Reserve Bank of India's repo rate of 5.25% due to ample liquidity in the banking system, dealers said. The tri-party repo rate was below the RBI's Standing Deposit Facility rate due to surplus liquidity and weak demand for funds, they said.

At 1030 IST, the one-day call rate was 5.15%, up from 5.08% Wednesday. The weighted average call rate was 5.14%, higher than 5.08% Wednesday. Trade volume in the call money market was INR 110.26 billion. Dealers expect the rate to be in the range of 4.60–5.15% during the day on the back of ample surplus liquidity in the banking system. The weighted average call rate is expected to be between 5.05% and 5.15%.

As per the latest figures, the net liquidity absorbed by the RBI was INR 5.21 trillion Wednesday, slightly higher than INR 5.13 trillion Tuesday. The amount is an indication of the liquidity surplus in the banking system. There were no large scheduled inflows or outflows on Wednesday, dealers said.

Thursday, outflows of INR 270 billion for the payment of Treasury bills are scheduled, which will be partly offset by inflows of INR 161 billion from the maturity of some T-bills and coupons on state bonds. Surplus liquidity is expected to be in the range of INR 5.0 trillion to INR 5.5 trillion this week and it will only drain if the RBI intervenes in the bond or foreign exchange markets, dealers said.

At 1030 IST, the tri-party repo rate was 4.78% Thursday, lower than 5.00% Wednesday. The weighted average rate was 4.79%, similar to 4.78% Wednesday. The volume in the tri-party repo market was INR 2.12 trillion. During the day, the weighted average tri-party repo rate is likely to be in the range of 4.70–4.90% due to surplus liquidity in the system.

"The rate in TREPs market (tri-party repo rate) is constantly trading below the RBI's SDF (Standing Deposit Facility rate of 5.00%) as mutual funds are sitting with a lot of cash and banks tend not to lend at such a low rate in TREPs market," a dealer at a private-sector bank said.

Traders are unsure of the quantum of variable rate reverse repo the central bank will roll over Friday, when the seven-day, INR 2.00-trillion auction conducted last week matures. Some dealers expect a full rollover while others said the central bank may avoid any liquidity absorbing measures ahead of goods and services tax outflows that will start Monday. These payments are expected to drain INR 1.5 trillion to INR 1.8 trillion from the banking system. While some traders were expecting another VRRR earlier this week, traders said this was unlikely on Thursday.

"As of today, we are not expecting any VRRR as tomorrow is redemption for Friday's seven-day VRRR," the dealer said. "Only after that (redemption) we could expect any other VRRR and we have not heard about any intervention from the RBI regarding anything."  (Durgesh Nandan)

End

With inputs from Shumaila Firoz

Edited by Akul Nishant Akhoury

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