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Informist, Wednesday, Apr. 22, 2026

By Durgesh Nandan

MUMBAI – The one-day interbank call money rate ended above the Reserve Bank of India's repo rate of 5.25% for the first time since Mar. 30 on demand for funds from banks as the surplus liquidity in the banking system dropped for the second consecutive day amid outflows for goods and services tax payments, dealers said.

The one-day call money rate ended at 5.34% Wednesday, up from 5.17% Tuesday. The weighted average rate was also 5.34%, up from 5.16% Tuesday. The volume in the call money market was INR 232.67 billion, lower than INR 252.50 billion in the previous session. The weighted average rate was at its highest level in more than three weeks. The call rate hit a day's high of 6.30%. A dealer at a state-owned bank said the trade at 6.30% was likely an erroneous one.   

The one-day tri-party repo rate ended at 4.98% Wednesday, up from Tuesday's close of 4.90%. The weighted average rate was 5.14%, up from 5.06% Tuesday. The volume in the tri-party repo market was INR 4.73 trillion. On Wednesday, the weighted average rate was above the repo rate as many banks were borrowing due to tax outflows, dealers said.

The rates in overnight markets were higher Wednesday due to demand from banks, mainly to meet requirements for goods and services tax outflow. There was demand for funds in the market as banks have kept INR 2 trillion with the RBI through the variable rate reverse repo auction which was conducted Friday, which will reverse this week.

"The rates were higher today (Wednesday) as banks needed funds, due to outflow for GST of 1.5 lakh crore (INR 1.5 trillion) which took place within two days, liquidity (funds parked) in SDF also fell today," a dealer at a private sector bank said. 

The net liquidity absorbed by the RBI--which is a proxy for liquidity surplus--was INR 3.28 trillion Tuesday, down from INR 4.07 trillion Monday, as per the latest figures. After the outflow for tax payments, payment for state bonds, and payments for Treasury bills, the surplus liquidity with banks is likely to be in the range of INR 2 trillion–INR 3 trillion Wednesday, dealers said. Outflow for payment of goods and services tax of INR 1.8 trillion–INR 2 trillion took place from Monday to Wednesday. A state-owned bank said some payments would continue Thursday.

"....due to less-than-estimated amount (outflows taken place) for GST payment by today (Wednesday), it is likely to take place for 15 thousand crore (INR 150 billion) to 20 thousand crore (INR 200 billion Thursday)," a dealer at a public sector bank said.     

OUTLOOK

On Thursday, the one-day call money rate is likely to open at 5.15-5.35%. Dealers expect the call rate to be around 4.80-5.35% during the day, while the tri-party repo rate is expected to be in the range of 5.00–5.25% on the back of ample surplus liquidity in the banking system. Dealers expect the weighted average call rate to be in the range of 5.25-5.35% for Thursday, while the weighted average tri-party repo market rate is likely to be in the range of 5.05-5.15%.

Dealers are divided whether the central bank will roll over the seven-day variable rate reverse repo auction it had conducted for INR 2 trillion Friday. Most dealers expect that the RBI will not conduct any VRRR after a fall in surplus liquidity in the system this week. Some dealers said the RBI could conduct a VRRR of INR 1.00 trillion to INR 1.50 trillion for the same tenure, as the Centre's expenditure for government salaries and pensions are expected to begin by the middle of next week.

CALL RATE

5.34%--Wednesday close for one-day loans

5.40%--Wednesday open for one-day loans

5.17%--Tuesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Down as demand for funds from banks eases amid GST outflow

MUMBAI - The one-day interbank call money rate was down from the day's opening level as demand for funds eased after primary dealerships had met their usual demand for funds. However, the weighted average rate in the call money market was near the Reserve Bank of India's marginal standing facility rate as banks needed funds for outflows for goods and services tax payments and for Tuesday's state bonds auction, dealers said.

At 1348 IST, the one-day call rate was at 4.95%, down sharply from Wednesday's opening of 5.40% as well as from Tuesday's close of 5.17%. The weighted average call rate was 5.37%, up from 5.16% Tuesday. The trading volume was INR 188.16 billion. One of the early trades in the market was done at 6.30%, the highest level in three weeks. Public-sector banks were seen lending in the call money market, dealers said.

At 1348 IST, the one-day tri-party repo rate was 5.06%, almost unchanged from 5.05% at the opening and flat against Tuesday's close of 5.05%. The weighted average tri-party repo rate was 5.17%, also up from 5.06% Tuesday. The weighted average rate was also at its highest level since late March. The volume in the tri-party repo market was INR 4 trillion.

For the rest of the day, the weighted average rate in the call money market is likely to be in the 5.35-5.37% band and the tri-party repo weighted average rate is likely to be in the range of 5.15-5.17%, dealers said.

"We were expecting the rates to shoot up today (Wednesday) because banks have kept 2 lakh crore (INR 2 trillion) with RBI (in SDF), so there are not many lenders in the market today (Wednesday)," a dealer at a public-sector bank said. "Weighted average rates in the overnight market will be in the similar range tomorrow (Thursday) also, it (overnight market rates) is likely to fall on Friday when VRRR (variable rate reverse repo auction) will be reversed."

Banks had parked INR 2 trillion with the RBI at a seven-day VRRR auction conducted Friday. The auction was oversubscribed and the central bank accepted the notified amount at the cut-off rate of 5.24%. Dealers are not expecting a VRRR auction Friday due to low surplus liquidity in the system. A few dealers said that if the RBI were to roll over last week's VRRR auction, it would do so for an amount of INR 1 trillion to INR 1.5 trillion.

Outflows of INR 1.8 trillion to INR 2 trillion for GST payments were scheduled between Monday and Wednesday. A few dealers said less than 50% of the total expected outflows will take place Wednesday. The net liquidity absorbed by the RBI was INR 3.28 trillion Tuesday, down from INR 4.07 trillion Monday, as per the latest figures. After the outflow for tax payments, the state bonds auction, and the auction of treasury bills, the surplus liquidity with banks is likely to be in the range of INR 2.0 trillion–INR 2.5 trillion Wednesday, dealers said.  (Durgesh Nandan)

India Call: Tops repo rate after 3 weeks as banks borrow amid GST outflow

MUMBAI – The one-day interbank call money market rate opened sharply up at 5.40% Wednesday due to early demand from primary dealerships and some banks. Banks were borrowing mainly for goods and services tax payments, dealers said. Primary dealerships were borrowing to meet their usual cash requirements, they said. The call money market rate was also above the Reserve Bank of India's repo rate of 5.25%, despite ample liquidity in the banking system. The call rate was at its highest level in three weeks.

At 1330 IST, the one-day call rate was 5.20%, higher than 5.17% Tuesday. The weighted average call rate was 5.40%, also higher than 5.16% Tuesday. Trade volume in the call money market was INR 63.35 billion. For rest of the day, the call rate is expected to trade in the 4.70–5.40% band.

At 1330 IST, the one-day tri-party repo rate was 5.18%, up from 4.90% Tuesday. The weighted average rate was 5.16%, also higher than 5.06% Tuesday. Volume in the tri-party repo market was INR 2.08 trillion. During the day, the weighted average tri-party repo rate is likely to be in a range of 5.00-5.20% as mutual funds have surplus liquidity to lend despite the increase in demand, dealers said. The tri-party repo rate was also at its highest level in almost a month.

Demand for funds from banks has increased as they parked INR 2 trillion with the RBI at a seven-day variable rate reverse repo operation conducted Friday, dealers said. The auction was oversubscribed and the central bank set a cut-off rate of 5.24% and a weighted average rate of 5.23% at the auction.

"Due to state bond and T-bill auctions (Treasury bill) and ongoing GST outflow, there is a rush for funds in the market, and this is the reason behind the higher rates in the overnight market," a dealer at a public sector bank said. Successful bidders will pay INR 169 billion Wednesday for the state bond auction. A INR 240-billion T-bill auction is scheduled 1030-1130 IST Wednesday.

Gross outflows for GST payments are seen at INR 1.8 trillion to INR 2.0 trillion by Wednesday, with around INR 1.1 trillion of that already having drained from the banking system over the past two sessions, dealers said. The net liquidity absorbed by the RBI -- a proxy for the banking system liquidity surplus -- fell to INR 3.28 trillion Tuesday from INR 4.07 trillion Monday.

"We expect that around the remaining 50% of the total outflows for GST will take place on Wednesday," a dealer at a state-owned bank said. (Durgesh Nandan)

End

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

With inputs from Shumaila Firoz

Edited by Deepshikha Bhardwaj

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