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Informist, Friday, May 8, 2026

 

By Aaryan Khanna

 

NEW DELHI – The three-day interbank call rate rose and ended at its highest level for the month and near the Reserve Bank of India's repo rate of 5.25%. Banks' need for funds ahead of the weekend pulled up the call money rate and led to an unusual quantum of trades after 1730 IST, by which time the market is usually stagnant, dealers said.

 

Friday, the three-day call money rate ended at 5.20%, down from 5.25% at open but up from 5.10% for one-day loans Thursday. The weighted average rate was 5.18%, the same as on Thursday. The volume in the overnight call contract rose to INR 189.41 billion from INR 170.69 billion Thursday. While usually there are only a few scattered trades of up to INR 1 billion post 1730 IST, dealers said, there were three trades at 5.18-5.20% on INR 5 billion each. The lack of lenders so late in the session led to the call rate rising, dealers said.

 

"A lot of people have been positioning based on an assumption that liquidity is going to remain in a very large surplus and may be caught short of cash cover (to meet asset-liability needs) for a day or two," a dealer at a private-sector bank said. "From the volumes we got in the second half it looks like some PSU (state-owned bank) was falling short."

 

The call money rate spiked to as high as 5.75% during the day after the tri-party repo market closed at 1600 IST. Most private-sector banks, and even some state-owned banks, were borrowing through the day, while mutual funds were lending, dealers said. The three-day tri-party repo rate ended at 4.80% Friday, down from 5.06% at open and from 5.02% at close for one-day loans on Thursday. The weighted average rate was 5.10%, slightly higher than 5.08% Thursday. The volume in the overnight tri-party repo contract was INR 5.09 trillion, up from INR 4.85 trillion Thursday. 

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.37 trillion Thursday, down from INR 2.65 trillion Wednesday, according to the latest data. No major inflows or outflows took place during the day and the settlement of the central bank's foreign exchange operations were also not significant, dealers said. Surplus liquidity Thursday fell due to outflow for payments of excise duty of around INR 250 billion-INR 300 billion, along with the RBI's liquidity injection of INR 107.95 billion through a four-day variable rate repo auction, they said.  

 

OUTLOOK 

Money markets are shut Saturday. The one-day interbank call money rate is likely to open at 5.25% Monday due to early demand for funds from primary dealerships and some small finance banks, dealers said. The one-day call money rate is seen in the range of 4.60–5.30% during the day, while the tri-party repo rate is expected in the band of 4.80–5.20%.

 

The weighted average call rate is likely to be in the range of 5.10–5.25%, while the tri-party repo rate is seen at 5.05–5.15%, dealers said. Liquidity conditions remain comfortable, but not enough for banks to lend funds below the repo rate in early trade, they said. The reversal of the INR 107.95-billion, four-day VRR auction is unlikely to have an impact on money market rates on Monday due to its small size, dealers said. 
 

CALL RATE

5.20%--Friday close for three-day loans

5.25%--Friday open for three-day loans

5.10%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	THURSDAY	THURSDAY
Overnight	5.23	5.23
3-day	--	--
14-day	5.77	5.75
1-month	5.88	5.87
3-month	6.32	6.30

 

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India Call: Slips below SDF rate on low demand amid surplus liquidity

 

MUMBAI – The three-day interbank call money rate was below the Reserve Bank of India's standing deposit facility rate of 5.00% as demand for funds eased amid surplus liquidity in the banking system, dealers said. Till noon, almost 70-75% of the daily volumes were already traded in the overnight market from primary dealerships and banks, they said.

 

At 1400 IST, the three-day call rate was 4.60%, down from Friday's opening level of 5.25% and Thursday's close of 5.10% for one-day loans. The weighted average call rate was 5.21%, up from 5.18% Thursday for one-day loans. Trade volume in the market was INR 128.40 billion. For the rest of the day, the call rate is unlikely to inch higher towards the repo rate due to lack of major outflows, dealers said. Despite surplus liquidity in the banking system, the call rate opened at the central bank's repo rate of 5.25% for five consecutive days due to demand for funds to fulfil disbursal requirements, redemption of commercial papers borrowed in late March, and mainly payment for excise duty, dealers said.  

 

At 1400 IST, the three-day tri-party repo market rate was 5.03%, below the opening level of 5.06% but slightly higher than Thursday's closing of 5.02%. The weighted average tri-party repo rate was 5.11%, up from 5.08% Thursday. Trade volume in the contract was INR 4.39 trillion. The lending side mainly comprised mutual funds, while some banks were borrowing for their regular cash needs, dealers said. 

 

The Reserve Bank of India conducted two four-day variable rate repo auctions within 10 days and infused transient liquidity of INR 365 billion into the banking system, even though the surplus liquidity was above INR 2 trillion. 

 

"The RBI is coming with VRRs (variable rate repo auction) so often mainly due to geopolitical conditions," a dealer at a private sector bank said. "They don't want the government bond (6.48%, 2035 bond yield) to go above 7.00%, and they also want to keep the overnight market rates at lower side of LAF (liquidity adjustment facility corridor)."

 

Some banks were mainly borrowing to fulfil the three-day fund requirements and regular cash needs. As of Thursday, cash balances with the RBI were INR 7.74 trillion, less than the average requirement of INR 7.88 trillion for the fortnight ending May. 15. The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.37 trillion Thursday, down from INR 2.65 trillion Wednesday, according to the latest data. Surplus liquidity fell due to outflow for payments of excise duty of around INR 250 billion and settlement of the Treasury bill auction conducted Wednesday. It was offset by inflows for redemption of T-bills and coupons on state bonds.  

At the end of the day, the weighted average call rate is expected to be 5.18–5.20% and in the tri-party repo market, it is expected at 5.10-5.11% due to no major demand for funds. (Durgesh Nandan) 

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India Call: Near RBI's repo rate on early demand for funds from PDs, banks

 

MUMBAI – The three-day interbank call money rate rose Friday on regular demand for funds from primary dealerships and some banks, despite surplus liquidity in the banking system, dealers said. Some banks were borrowing to fulfil cash requirements for three days as the call money market is shut on Saturday. 

 

At 0945 IST, the call money market rate was 5.20%, higher from Thursday's closing at 5.10% for one-day loans. The weighted average call rate was 5.24%, also higher from 5.18% the previous day. At 0930 IST, trade volume in the call money market was INR 43.20 billion, lower from INR 54.62 billion at the same time on previous day. The call money rate is likely to trade near the repo rate due to the requirement for funds from some banks to maintain the cash reserve ratio for the fortnight ending and also three-day cash needs. 

 

"As of now, there is no major demand for funds today (Friday), so the only borrowing needs would be CRR (cash reserve ratio) requirements and three-day borrowing," a dealer at a private sector bank said. 

 

At 0945 IST, the one-day tri-party repo rate was 5.13%, up from 5.02% Thursday. The weighted average rate was 5.11%, also higher from 5.08% the previous session. The volume in the tri-party repo market was INR 2.05 trillion. Mutual funds were on the lending side while some banks were borrowing in the tri-party repo market, dealers said.  

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 2.37 trillion Thursday, down from INR 2.65 trillion Wednesday, according to the latest data. Liquidity declined mainly due to outflow for payments of excise duty of INR 300 billion. Banks have maintained cash balances of INR 7.74 trillion as of Wednesday, less than the average requirement of INR 7.88 trillion for the fortnight ending May. 15.

 

For the rest of the day, the weighted average call rate is likely to stay in the 5.15-5.25% band and that in the tri-party repo market is likely to hover around 5.00-5.10%, dealers said. (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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