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Informist, Thursday, Apr. 23, 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% due to less liquidity surplus with banks as INR 2 trillion was locked with the RBI in the variable rate reverse repo auction it had conducted Friday, dealers said. The tri-party repo market rate ended at RBI's Standing Deposit Facility rate of 5.00% due to low demand for funds from banks and other financial institutions during the day, dealers said. 

Dealers said the surplus liquidity in the banking system was not actually with the banks as shown in the data released by the RBI. Banks have kept two-thirds of net liquidity surplus with the RBI, which will actually return to the banking system on Friday, and banks have only around INR 1 trillion with themselves, dealers said. The central bank had conducted a seven-day VRRR on Friday for INR 2 trillion.

The one-day call money rate ended at 5.30% Thursday, down from 5.34% Wednesday. The weighted average rate was 5.25%, down from 5.34% Wednesday. The volume in the call money market was INR 250.06 billion, higher than INR 232.22 billion in the previous session. The call money market rate usually rises after the tri-party repo market shuts due to late demand from some banks. The call money market rate closed above the repo rate for the second consecutive day due to demand for funds from banks post goods and services tax outflow. 

Even when there was no major demand for funds in the market, rates and volume in the overnight market were slightly higher than usual, despite the surplus liquidity in the banking system due to aggressive borrowing from banks to fill in the cash requirements post goods and services tax outflow, dealers said.

"The rates in the overnight market were similar to yesterday (Wednesday) as banks needed to fill the buffer after goods and services tax outflow," a dealer at a public sector bank said. "But as the demand for funds eased later in the day, the TREPs rate closed at SDF (rate)."

The one-day tri-party repo rate ended at 5.00% Thursday, marginally up from Wednesday's close of 4.98%. The weighted average rate was 5.12%, slightly down from 5.14% Wednesday. The volume in the tri-party repo market was INR 4.86 trillion, higher from INR 4.73 trillion Wednesday. Banks were the major borrowers in the tri-party repo market Thursday to meet credit demand requirements, dealers said.

The net liquidity absorbed by the RBI was INR 3.30 trillion Wednesday, slightly up from INR 3.28 trillion Tuesday, according to the latest data. Cash balances with the RBI decreased to INR 7.87 billion Wednesday from INR 8.16 trillion Tuesday due to tax outflows that took place this week. A few dealers said the outflow for payments for goods and services tax outflow took place for INR 200 billion to INR 300 billion on Thursday. 

OUTLOOK

On Friday, the three-day call money rate is likely to open at 5.15-5.35%. Dealers expect the call rate to be around 4.75-5.30% during the day, while the tri-party repo rate is expected to be in the range of 4.80–5.20% on the back of ample surplus liquidity in the banking system. Dealers expect the weighted average call rate to be in the range of 5.20-5.25% for Friday, while the weighted average tri-party repo market rate is likely to be in the range of 5.10-5.15%.

Most dealers do not expect the central bank to rollover the seven-day variable rate reverse repo auction it had conducted for INR 2 trillion Friday. There is less surplus liquidity in the system this week and the end of the fortnight approaches next 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

5.30%--Thursday close for one-day loans

5.30%--Thursday open for one-day loans

5.34%--Wednesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Dn as banks, PD fulfil demand for funds; weighted avg above repo

MUMBAI - The one-day interbank call money rate was down from the day's opening level as demand for funds eased after primary dealerships met their demand for funds. Banks had also borrowed heavily in the first half as INR 2 trillion of funds were locked with the Reserve Bank of India in a variable rate reverse repo auction till Friday, pushing up the weighted average call rate to near the repo rate, dealers said.

"Banks only have one lakh crore (INR 1 trillion) with themselves as they have locked 2 lakh crore (INR 2 trillion) with the RBI (in VRRR), which will reverse tomorrow (Friday)," a dealer at a public-sector bank said.

At 1349 IST, the one-day call rate was 4.65%, sharply down from Thursday's opening level of 5.30% and also from Wednesday's close of 5.34%. The weighted average call rate was 5.28%, down from 5.34% Wednesday. The trading volume was INR 208.50 billion.

At 1349 IST, the one-day tri-party repo rate was 5.12%, down from 5.15% at the opening but up from Wednesday's close of 4.98%. The weighted average tri-party repo rate was 5.12%, down from 5.14% Wednesday. For the rest of the day, the weighted average rate in the call money market is likely to be in the 5.25–5.27% band and the tri-party repo weighted average rate is likely to be in the range of 5.15-5.17%, dealers said.

Volume in the overnight market was higher than usual even though there was no major requirement for funds by banks. However, surplus liquidity in the banking system was not as healthy as indicated by the RBI's net liquidity absorbed of INR 3.30 trillion Wednesday due to the VRRR. "...to some extent, maybe banks are borrowing in the overnight market, for credit demand requirement or for treasury bills auction conducted yesterday (Wednesday) because even we couldn't figure out why rates are up," a dealer at a public sector bank said.

Most of the dealers do not expect the central bank to roll over the INR-2-trillion, seven-day VRRR auction in its entirety on Friday. The liquidity surplus has fallen after goods and services outflows of around INR 1.5 trillion this week. Moreover, the reporting fortnight will end next week and two 90-day variable rate repo auctions will also drain INR 418.04 billion from the banking system, dealers said. (Durgesh Nandan)

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

MUMBAI – The one-day interbank call money rate was down from the previous day on Thursday, but was still above the Reserve Bank of India's repo rate of 5.25% due to demand for funds from primary dealerships and some banks, despite surplus liquidity in the banking system, they said. 

At 0946 IST, the one-day call rate was 5.30%, lower than 5.34% Wednesday. The weighted average call rate was also 5.30%, also lower from 5.34% Wednesday. Trade volume in the call money market was INR 69.65 billion. Dealers expect the call rate to be within the 4.80-5.40% band during the day.

At 0946 IST, the one-day tri-party repo rate was 5.10%, up from 4.98% Wednesday. The weighted average rate was 5.12%, marginally lower than 5.14% Wednesday. The volume in the tri-party repo market was INR 2.25 trillion. Dealers expect the weighted average call rate to be in the range of 5.15–5.25% for Thursday, while the weighted average tri-party repo market rate is likely to be in the range of 5.05–5.15%.

Some banks were borrowing in the tri-party repo market to meet daily funding requirements and for the reversal of two variable rate repo auctions, dealers said. Of INR 1.37 trillion borrowed by banks in the two 90-day VRR auctions conducted by the RBI on Jan. 30, most of it was pre-paid by the banks and only INR 418.04 billion was left in the banking system as of Wednesday.  

The net liquidity absorbed by the RBI--which is a proxy for liquidity surplus--was INR 3.30 trillion Wednesday, slightly up from INR 3.28 trillion Tuesday, according to the latest figures. Outflows of INR 240 billion for payment of the treasury bill auction conducted on Wednesday, will be majorly offset by inflows of INR 219.43 billion for maturity of treasury bills and coupon payments on state government bonds and 7.37%, 2028 bond are scheduled for Thursday. 

Dealers have mixed views on whether the central bank will roll over the seven-day variable rate reverse repo auction maturing on Friday for INR 2 trillion. Most of them said it is less likely for the RBI to roll over the VRRR auction due to a fall in liquidity surplus in the past few days. While a few said it could bring another auction, as month-end spending by the government is expected to begin by Wednesday. 

"We don't expect another VRRR (auction), as the liquidity (surplus) is already low and also the maturity of two VRRs (variable rate repo auction) is scheduled for next week, so the RBI may not come up with another VRRR," a dealer at a private sector bank said. The RBI had conducted one seven-day VRRR auction for INR 2 trillion on Apr. 10 and rolled it over for another seven days last week. (Durgesh Nandan)

End

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

Edited by Akul Nishant Akhoury

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