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Informist, Thursday, Apr. 30, 2026

By Durgesh Nandan

MUMBAI – The four-day interbank call money rate ended below the Reserve Bank of India's repo rate of 5.25% Wednesday on comfortable liquidity surplus in the banking system, dealers said. However, the weighted average call rate ended above the repo rate because of hefty borrowing at a higher rate in early trade due to the end of the reporting fortnight, they added.

The central bank unexpectedly held a variable rate repo auction for INR 1 trillion, for a four-day tenure. The RBI had conducted two 90-day VRR auctions Jan. 30. and infused INR 1.37 trillion into the banking system. "The RBI came up with VRR today (Thursday) as the rates in the overnight market were above the repo rate in the early hours and they wanted to infuse liquidity to cool down rates at the month-end," a dealer at a public sector bank said.

However, the VRR auction was undersubscribed and RBI accepted all INR-257.15-billion bids at the cut-off rate of 5.26%. "The VRR was not fully subscribed as the rates in the overnight market were lower than the cutoff rate of 5.26%, during the auction hour," another dealer at a public-sector bank said. 

Thursday, the four-day call money rate ended at 5.20%, higher from 5.15% Wednesday. The weighted average rate was 5.29%, up from 5.16% the previous day. The volume in the call money market was INR 152.75 billion, down from INR 229.36 billion Wednesday. 

The four-day tri-party repo rate ended at 5.30% Thursday, up from 5.15% for one-day loans Tuesday. The weighted average rate was 5.25%, higher from 5.08% Wednesday. The volume in the tri-party repo market was INR 4.87 trillion, down from INR 5.21 trillion the previous day. During the day, the tri-party rate was traded at 5.44%, its highest rate, compared with a high of 5.40% in the call market. Despite being a secured market, the tri-party repo rate traded above the call rate at times during the day as because of the month-end, mutual funds faced redemption pressure. So, there were fewer number of lenders in the market. 

The rates in the overnight market were settled after the VRR auction, as most of the volumes in both markets were traded in the early hours today, dealers said. The weighted average rates in the overnight market were high due to demand for funds from most banks to meet cash needs for the reporting fortnight ending Thursday and to repay the remaining amount of INR 418 billion borrowed at the two 90-day variable rate repo auctions, which reversed Thursday, dealers said. 

The net liquidity absorbed by the RBI--an indication of surplus liquidity in the banking system--was INR 2.15 trillion Wednesday, down from INR 2.58 trillion Tuesday, according to the latest data. Banks had maintained INR 8.03 trillion with the RBI as of Wednesday, which is less than the required INR 8.07 trillion for the fortnight ending Thursday. Most dealers said inflows for payments for pensions and salaries had not been transferred to the banking system Thursday. Government month-end spending is likely to take place next week, dealers said.

"We didn't see any inflows from the government today (Thursday), even if it had come, then it might be around 10 thousand crore (INR 100 billion) to 20 thousand crore (INR 200 billion)," the dealer said.  

OUTLOOK

Saturday, the interbank call money rate for two-day loans is likely to open around 5.05-5.10%. Dealers expect the call rate to be at 4.90-5.15% during the day, while the tri-party repo rate is expected to be in the range of 4.80–5.10% due to low participants in the overnight market seen on Saturday. Indian financial markets are shut Friday for Maharashtra Day and Labour Day.

CALL RATE

5.20%--Thursday close for four-day loans

5.30%--Thursday open for four-day loans

5.15%--Wednesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Above repo as reporting fortnight needs up demand post 1600 IST

MUMBAI – The four-day interbank call money rate rose above the Reserve Bank of India's repo rate of 5.25% due to demand for funds from banks at the end of the reporting fortnight after the tri-party repo market closed at 1600 IST. Money market rates had eased even below the Standing Deposit Facility rate of 5.00% due to the variable rate repo auction conducted by the central bank intraday, dealers said.

The interbank call money rate opened at 5.30% Thursday amid initial demand for funds on the last day of the reporting fortnight Thursday, and funding requirements for a four-day period. Indian financial markets are shut Friday for Maharashtra Day and Labour Day. The demand revived towards the end of market hours, despite thin trade since 1200 IST, and pushed up the call money rate, dealers said. 

At 1711 IST, the four-day call rate was back at 5.28%, up from Wednesday's close of 5.15% for one-day loans. The weighted average call rate was 5.29%, sharply up from 5.16% Wednesday. Trading volume was INR 121.24 billion. For the rest of the day, the call money rate is seen in the range of 4.60–5.30%, dealers said.

The four-day tri-party repo rate ended at 5.30% at 1600 IST, sharply up from Thursday's opening level of 5.10% and Wednesday's one-day close of 5.15%. The weighted average tri-party repo rate was 5.25%, up from 5.08% Wednesday. In the tri-party repo market, rates rose above the repo as mutual funds turned borrowers amid month-end redemption pressure, dealers said. The volume in the market was INR 5.01 trillion, lower than the previous day.

The RBI had conducted a four-day VRR of INR 1 trillion and had accepted all bids worth INR 257.15 billion Thursday. This had helped banks meet their demand for funds earlier in the day and helped offset some of the drain from the maturity of two 90-day VRR auctions worth INR 418 billion Thursday, dealers said.

"There was also maturity of two 90-day VRR today (Thursday), which had put some upward pressure on rates at the start," a dealer at a public-sector bank said. However, the impact remained limited as banks had used the unique prepayment option in these operations when overnight rates started to ease starting February, dealers said. Banks had initially borrowed INR 1.37 trillion through the two 90-day auctions.

Liquidity conditions are expected to improve further going ahead, supported by government month-end spending. The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.15 trillion Wednesday, down from INR 2.58 trillion Tuesday, according to the latest data. This was the lowest liquidity surplus since Mar. 30.

"We are not expecting further VRR rollover on Monday, as the cash reserve ratio requirement is set to ease from the next reporting cycle and net demand and time liabilities are likely to improve, supporting overall liquidity conditions," a dealer at a private-sector bank said. "This will leave banks with more surplus funds, easing their reliance on overnight borrowings and putting some downward pressure on rates."  (Shumaila Firoz and Aaryan Khanna) 

India Call: Eases to RBI's SDF rate on announcement of INR 1-tln 4-day VRR

MUMBAI – The four-day interbank call money rate eased to the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds declined after the announcement of a four-day variable rate repo auction. The call rate had risen to a one-month high of 5.40% within one hour of Thursday's trading session. At 1047 IST, the four-day call rate was 5.00%, lower than 5.15% Wednesday for one-day loans.

However, the weighted average call rate was 5.35%, up from 5.16% the previous day. At the same time, the four-day tri-party repo rate was 5.23%, sharply up from 5.04% for one-day loans Wednesday. The weighted average rate was 5.23%, also higher from 5.08% the previous session.

The four-day interbank call money rate shot up early in the session as liquidity surplus in the banking system fell to a one-month low. Demand for funds from banks for four-day loans and demand to meet credit disbursement requirements also pushed up the call rate to a month's high, dealers said. Indian financial markets are shut Friday for Maharashtra Day and Labour Day.

To support the banking system's liquidity, the RBI conducted a four-day VRR auction for INR 1 trillion between 1015 IST to 1045 IST Thursday.

The net liquidity absorbed by the RBI -- an indication of surplus liquidity in the banking system -- on Wednesday was INR 2.15 trillion, down from INR 2.58 trillion Tuesday, according to the latest data. The surplus liquidity in the banking system was at the lowest since Mar. 30. It has fallen considerably from its high of INR 5.50 trillion earlier this month due to outflows of around INR 2 trillion for goods and services tax payments.

"Call money market rate was high due to demand from banks mainly to fulfil credit disbursement requirements at the month-end and there is also a shortage of liquidity due to outflow from the banking system for last month's short-term debts," a dealer at a private sector bank said. There is also demand from banks to repay the remaining amount of INR 418 billion borrowed through two 90-day VRR auctions in January.

Trade volume in the call money market was INR 77.24 billion and that in the tri-party repo market was INR 3.28 trillion. For the rest of the day, the weighted average call rate is seen at 5.25-5.30% and that in the tri-party repo market it is likely to be around 5.20%, dealers said. Dealers expect rates to be 5.10-5.20% in the overnight market during the day on likely inflows from government for salaries and pensions.

"We are expecting government month-end spending to start from today and around 70 thousand crore to 80 thousand crore (INR 700 billion to INR 800 billion) will be transacted to the banking system," a dealer at a public sector bank said.

The surplus liquidity will increase to around INR 4 trillion after the government's month-end spending. Banks Wednesday maintained cash balances of INR 8.03 trillion with the RBI, lower than the average requirement of INR 8.07 trillion for the fortnight ending Thursday.  (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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