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Informist, Monday, Apr. 27, 2026

By Durgesh Nandan

MUMBAI – The one-day interbank call money rate ended below the Reserve Bank of India's repo rate of 5.25% Monday amid ample liquidity surplus in the banking system, dealers said. The tri-party repo rate ended marginally above the RBI's Standing Deposit Facility rate of 5.00% due to low demand for funds and surplus liquidity with most mutual funds and insurance companies, they said.

The one-day call money rate ended at 5.15% Monday, up from 5.11% for three-day loans Friday. The weighted average rate was 5.11%, unchanged from the previous session. The volume in the call money market was INR 258.15 billion, up from INR 240.46 billion Friday. The volumes were higher in the overnight market due to demand for funds from banks for credit disbursements and as the last day of the reporting fortnight, Thursday, neared. 

The one-day tri-party repo rate ended at 5.04% Monday, unchanged from the rate for three-day loans Friday. The weighted average rate was 5.02%, marginally down from 5.03% Friday. The volume in the tri-party repo market was INR 5.03 trillion, up from INR 4.94 trillion. 

"Mutual funds will lend at low rates due to surplus liquidity with themselves," a dealer at a public sector bank said. "As long as there is uncertainty in the equity market, they will be sitting on a lot of cash." 

The net liquidity absorbed by the RBI – an indication of the liquidity surplus in the banking system – was INR 2.92 trillion Sunday, tad up from INR 2.90 trillion Saturday, according to the latest data. The government's month-end spending, expected to begin from Wednesday, is likely to add to the surplus liquidity in the banking system, dealers said. Banks have maintained cash balances of INR 7.99 trillion Sunday, lower than the average requirement for the fortnight ending Thursday, of INR 8.07 trillion. 

"After the month-end spending from the government, the surplus liquidity will be around 4 lakh crore (INR 4 trillion) to 4.5 lakh crore (INR 4.5 trillion)," the dealer quoted above said.

Despite the surplus liquidity after the government month-end spending, most dealers do not expect any variable rate reverse repo auction for at least this week.

"The central bank will wait and watch till next week to see if the tri-party repo market weighted average rate will fall below the SDF (rate)," a dealer at another public sector bank said. "Then only it (the RBI) is likely to come up with another VRRR." 

OUTLOOK

On Tuesday, the one-day call money rate is likely to open at 5.10-5.15%. Dealers expect the call rate to be around 5.15% during the day, while the tri-party repo rate is expected to be in the range of 4.90–5.10% on the back of ample surplus liquidity in the banking system. Dealers expect the weighted average call rate to be in the range of 5.10-5.15% for Tuesday, while the weighted average tri-party repo market rate is likely to be in the range of 4.95-5.05%.

Dealers said the rates in the overnight market will not rise above the repo rate as demand for funds from banks for the next two sessions is unlikely. However, by Thursday, rates could inch higher due to the end of the reporting fortnight and to provide for funding requirements over the extended weekend. Indian financial markets are shut Friday for Maharashtra Day and Labour Day. The weighted average call rate will be around 5.10% and the weighted average rate in the tri-party repo market is likely to be in the band of 4.95-5.05% till Wednesday, dealers said. Dealers expect the surplus liquidity to rise to around INR 4 trillion after the month-end spending from the government in the beginning of May.

CALL RATE

5.15%--Monday close for one-day loans

5.15%--Monday open for one-day loans

5.11%--Friday close for three-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Falls as demand eases; some banks borrow for CRR maintenance

MUMBAI – The one-day interbank call money rate fell below its opening level and was at the Reserve Bank of India's Standing Deposit Facility rate Monday as the early demand for funds from primary dealerships eased, dealers said. Some banks likely borrowed in the money market to shore up their cash balances with the Reserve Bank of India to meet regulatory requirements, they said. 

Some banks were unable to maintain the RBI-mandated 3% cash reserve ratio due to the goods and services tax outflows that brought down surplus liquidity. This was exacerbated by INR 2 trillion being parked with the RBI in a seven-day, variable rate reverse repo auction till Friday, dealers said. On an average, banks have maintained an INR-8.10-trillion daily cash balance with the RBI for the reporting fortnight ending Thursday, against the requirement of INR 8.07 trillion.

At 1644 IST, the one-day call rate was 5.00%, down from Monday's opening level of 5.15% and up from Friday's close of 5.11% for three-day loans. The weighted average call rate was 5.12%, similar to 5.11% Friday. The trading volume was INR 230 billion. During the day, the call money rate is expected in the range of 4.60–5.20% for the rest of the day, dealers said. 

The one-day triparty repo rate ended at 5.04%, higher than 4.95% at the open and the same as Friday's close for three-day loans. The weighted average triparty repo rate was 5.02%, similar to 5.03% Friday. The net liquidity absorbed by the RBI -- an indication of surplus liquidity -- was INR 2.92 trillion Sunday, up from INR 2.90 trillion Saturday, according to the latest data. The liquidity surplus likely fell Monday due to the settlement of the INR 320-billion gilt auction conducted Friday. 

"Along with the primary dealers, some public-sector banks are also seen on the borrowing side today (Monday)," a dealer at a private-sector bank said.

Dealers expect rates to ease later this week as government month-end spending, likely on Wednesday and Thursday, is likely to support liquidity to the banking system. Some dealers also said the RBI may conduct a variable-rate reverse repo auction Thursday to absorb excess liquidity after government spending.  (Shumaila Firoz and Aaryan Khanna) 

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

MUMBAI – The one-day interbank call money rate was down Monday and was at the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to surplus liquidity in the banking system and low demand for funds, dealers said. The tri-party repo rate was below the central bank's SDF rate due to ample liquidity with mutual funds and insurance companies, they added.

At 0937 IST, the one-day call rate was 5.00%, lower from 5.11% for three-day loans Friday. The weighted average call rate was 5.15%, higher from 5.11% Friday. Trade volume in the call money market was INR 82.43 billion. At 0937 IST, the one-day tri-party repo rate was 5.02%, down from 5.04% Friday for three-day loans. The weighted average rate was 5.01%, also lower from 5.03% in the previous session. The volume in the tri-party repo market was INR 2.08 trillion.

Dealers said the rates in the overnight market are unlikely to rise above the repo rate due to lack of major outflows scheduled during the day. The weighted average call rate is expected to be around 5.15% and the weighted average rate in the tri-party repo market is likely to be at 4.95–5.05%.

The net liquidity absorbed by the RBI -- an indication of surplus liquidity -- was INR 2.95 trillion Friday, down from INR 2.99 trillion Thursday, according to the latest data. Inflows from the coupon payments and redemption of state bonds were INR 72.80 billion, while outflow of INR 320 billion for payment of gilts auction is scheduled Monday. Dealers expect the government's month-end spending to be around INR 1.5 trillion which will begin from Wednesday. This will increase the liquidity surplus to around INR 4 trillion.

Dealers do not expect the RBI to conduct any variable rate reverse repo auction despite surplus liquidity in the system after the government's month-end spending from Wednesday, as banks will have to maintain the required cash balance for the fortnight ending Thursday, which is INR 8.07 trillion. Cash balances with the RBI as of Friday were INR 7.96 trillion, less than the average requirement, according to data by the RBI. 

"The RBI will not conduct any VRRR (auction) this week even after the government's month-end spending, as they (the RBI) are regulating the MIBOR rate (Mumbai Interbank Offer Rate), if it goes below 5.05% (which was 5.14% on Friday), only then the RBI is likely to conduct another auction," a dealer at small finance bank said. "Last time they (the RBI) conducted a VRRR when the MIBOR rates were below 5.08%."  (Durgesh Nandan) 

End

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

Edited by Tanima Banerjee

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