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Informist, Wednesday, Apr. 29, 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% Wednesday, amid ample liquidity surplus in the banking system, dealers said. However, the weighted average call rate was near a one-week high due to banks' demand for funds toward the end of the reporting fortnight. Overnight tri-party repo rate ended at its highest level since Mar. 9 due to demand for funds from mutual funds, though it remained below the RBI's repo rate. 

Wednesday, the one-day call money rate ended at 5.15%, flat from Tuesday. The weighted average rate was 5.16%, marginally higher than the previous day. The volume in the call money market was INR 229.36 billion, slightly down from INR 232.12 billion Tuesday. 

The weighted average call rate was high due to demand for funds from most domestic banks to meet cash needs for the reporting fortnight ending Thursday and to repay funds borrowed at the two 90-day variable rate repo auctions, which will reverse Thursday, dealers said. 

The one-day tri-party repo rate ended at 5.15% Wednesday, up from 5.05% Tuesday. The weighted average rate was 5.08%, slightly higher from 5.05% Tuesday. The volume in the tri-party repo market was INR 5.21 trillion, also up from INR 5.13 trillion the previous day.

The triparty rate rose to as much as 5.33% on Wednesday, compared with 5.27% in the call market. Despite being a secured market, the tri-party repo rate traded above the call rate at times during the day due to a liquidity shortage among mutual funds, dealers said. Mutual funds are short of liquidity due to month-end redemptions. 

"Mutual funds are short of liquidity due to month-end redemption pressure and banks will not lend below the SDF rate. That's why the TREPs (tri-party rate repo market) rate is high," a dealer at a private sector bank said. 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.58 trillion Tuesday, down from INR 2.75 trillion Monday, according to the latest data. Banks have maintained INR 7.87 trillion with the RBI as of Tuesday, which is less than the required INR 8.07 trillion for the fortnight ending Thursday.

Most dealers said the rates are higher as the month-end spending from the government for salaries and pensions did not take place Wednesday. However, a few dealers said there were inflows of around INR 700 billion from government spending Wednesday.

"If government month-end spending had come today (Wednesday), then rates would have settled down near SDF (rate)," a dealer at a public sector bank said.  

OUTLOOK

On Thursday, the four-day call money rate is likely to open around 5.15%. Dealers expect the call rate to be at 4.90-5.30% during the day, while the tri-party repo rate is expected to be in the range of 4.80–5.25%, as the liquidity surplus has reduced considerably from its high of INR 5.50 trillion seen earlier this month. 

Rates in the overnight market will be higher Thursday due to demand for funds on the last trading day of the month, due to banks' reporting requirements and mutual funds facing redemptions. Dealers expect that if inflows from the government expenditure are transferred to the banking system in the first half of the day, then rates will trade around 5.10-5.20% in the overnight market.

Indian financial markets are shut Friday for Maharashtra Day and Labour Day, and traders may increase their borrowing to provide for a four-day weekend. The weighted average call rate will be in the 5.15-5.25% band and that in the tri-party repo market is likely to be in the band of 5.05-5.15% Thursday, dealers said.

CALL RATE

5.15%--Wednesday close for one-day loans

5.20%--Wednesday open for one-day loans

5.15%--Tuesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near repo rate on credit offtake, fortnight-end requirements Thu

MUMBAI – The one-day interbank call money rate hovered around the Reserve Bank of India's repo rate Wednesday due to demand for funds on strong credit offtake and requirements before the reporting fortnight ending Thursday, dealers said. The weighted average call rate was the highest in nearly a week.

"Rates are near the repo rate because of good credit offtake and fortnight-ending borrowing," a dealer at a private-sector bank said. "Both PSU (public-sector banks) and private-sector banks are borrowing more in the call market," the dealer added.

At 1431 IST, the one-day call rate was 5.18%, down from Wednesday's opening level of 5.20% and up from Tuesday's close of 5.15%. The weighted average call rate was 5.17%, up from 5.16% Tuesday. Trading volume was INR 201.21 billion. For the rest of the day, the call money rate is seen in the range of 4.60–5.25%, dealers said.

Liquidity conditions in the banking system are likely to improve towards the end of the day as the government's month-end spending for salary and pensions is expected Wednesday. "We expect government spending of about 60,000 crore to 80,000 crore (INR 600 billion to INR 800 billion) to reflect by end of the day, which should ease liquidity further," a dealer at another private-sector bank said.

Systemic liquidity is expected to remain comfortable at the end of the month, with a surplus seen around INR 4 trillion, as most of the funds borrowed at the 90-day variable-rate repo auctions, which will reverse Thursday, have already been paid, dealers said. The RBI had conducted two 90-day VRRs on Jan. 30 and had accepted bids totalling INR 1.37 trillion.

At 1431 IST, the one-day tri-party repo rate was 5.17%, sharply up from Wednesday's opening level of 5.01% and Tuesday's close of 5.05%. The weighted average tri-party repo rate was 5.07%, up from 5.05% Tuesday. In the tri-party repo market, rates rose above repo to the day's high of 5.33% as mutual funds and insurance companies turned borrowers amid month-end redemption pressure, dealers said.

"TREPS rates are high as mutual funds and insurance companies are borrowing due to month-end redemption pressure," a dealer at a public-sector bank said.

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.58 trillion Tuesday, down from INR 2.75 trillion Monday, according to the latest data, as banks increased cash balances with the RBI to INR 7.88 trillion Tuesday from INR 7.76 trillion Monday. (Shumaila Firoz) 

India Call: Up on early demand for funds from primary dealerships, some bks

MUMBAI – The one-day interbank call money rate was up Wednesday due to regular demand for funds from primary dealerships and some banks, dealers said. However, the call money market rate was below the central bank's repo rate of 5.25%. The tri-party repo market was marginally above the Standing Deposit Facility rate of 5.00%. In the tri-party repo market, some mutual funds and insurance companies were borrowing due to month-end redemption pressure, dealers said.

At 0946 IST, the one-day call rate was 5.20%, higher than 5.15% Tuesday. The weighted average call rate was also 5.20%, higher than 5.16% the previous day. Trade volume in the call money market was INR 76.39 billion. The one-day tri-party repo rate was 5.05%, marginally up from 5.04% Tuesday. The weighted average rate was also 5.05%, flat from the previous session. The volume in the tri-party repo market was INR 1.70 trillion. 

During the day, rates in the overnight market are not likely to rise above the RBI's repo rate on surplus liquidity in the banking system, but they will also not settle below the RBI's SDF rate due to demand for funds ahead of the extended weekend, dealers said.

"Call rate will not cross repo (rate) as banks have (surplus) liquidity, but demand is also there due to fortnight ending tomorrow (Thursday)," a dealer at a public sector bank said. "Not all banks, but whoever needs funds will borrow within these two days, so the rates (in the overnight market) will not cool down." Dealers said the weighted average call rate is likely to end around 5.15% and the tri-party repo rate at 5.05%.

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.58 trillion Tuesday, down from INR 2.75 trillion Monday, according to the latest data. Liquidity surplus fell as banks increased their cash balances with the Reserve Bank of India to INR 7.88 trillion Tuesday from INR 7.76 trillion Monday. However, cash balances remained below the average requirement of INR 8.07 trillion for the fortnight ending Thursday. 
 

Most dealers said inflows from the government's month-end spending for salary and pensions are likely to begin Wednesday. These inflows are expected to push banking system liquidity above INR 4 trillion. (Durgesh Nandan)

End

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

Edited by Saji George Titus

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