More Stories

Informist, Monday, May 11, 2026

 

By Shumaila Firoz 

 

MUMBAI – The call rate ended below the Reserve Bank of India's standing deposit facility rate of 5.00% on weak demand for funds after banks and primary dealerships met their needs early in the day, dealers said. Rates softened as the day progressed after participants met their funding needs, pulling the call money rate closer to the RBI's SDF rate by the end of the session, they added. However, the weighted average call rate ended at 5.31%, above the RBI's repo rate of 5.25%, due to firm demand for funds during early trade.  

 

Overnight rates were elevated in early trade due to strong demand for funds as markets reopened after the weekend. Banks borrowed to meet their cash reserve ratio requirements for the fortnight ending Friday, adding to the initial pressure on overnight rates. Banks also borrowed funds amid a shortfall in their cash as liquidity in the banking system continued to shrink, a dealer at a state-owned bank said. 

 

Primary dealerships aggressively borrowed to arrange funds for settlement of the INR 340-billion government securities auction conducted Friday. "The auction was conducted on Friday and settled today (Monday), so primary dealers had to arrange funds. With a minimum underwriting commitment of 50%, nearly INR 170 billion had to be funded, which kept (overnight) rates elevated in early trade," a dealer at a private sector bank said.

 

On Monday, the one-day call money rate ended at 4.75%, sharply lower than 5.40% at open and also down from 5.20% for three-day loans Friday. The weighted average rate was 5.31%, up from 5.18% Friday. The volume in the overnight call was INR 161.11 billion, down from INR 189.42 billion Friday.

 

Liquidity conditions in the banking system remained under pressure due to outflows of around INR 300 billion towards excise duty and tax deducted at source payments. The reversal of the four-day variable rate repo auction Monday conducted last week also contributed to the tightness in liquidity, dealers said. Upcoming goods and services tax outflows around May 20 could further strain liquidity conditions, the dealer at the private sector bank said. The RBI will conduct a three-day VRR auction for INR 500 billion between 0930 IST and 1000 IST Tuesday to infuse transient liquidity to support the banking system, the central bank announced after market hours Monday. 

 

The one-day tri-party repo rate ended at 5.04% Monday, higher than 4.80% Friday. The weighted average rate was 5.14%, higher than 5.10% Friday. The volume in the overnight tri-party repo contract was INR 5.26 trillion, up from INR 5.09 trillion Friday. The tri-party rate opened at 5.11%, and traded in the range of 4.90% to 5.25%. 

 

The net liquidity absorbed by the RBI--an indicator of surplus liquidity in the banking system--was INR 2.22 trillion Sunday, up from INR 2.15 trillion Saturday. Liquidity in the banking system fell due to outflows of INR 300 billion Friday for excise duty and tax deducted at source, dealers said. Banks maintained cash balances of INR 7.58 trillion as of Sunday, down from INR 7.64 trillion Saturday and lower than the average requirement of INR 7.88 trillion for the fortnight ending Friday. 

 

OUTLOOK 

On Tuesday, the one-day interbank call money rate is likely to open at the RBI's repo rate of 5.25% due to early demand for funds from primary dealerships and some banks. Liquidity conditions remain comfortable, but not enough for banks to lend funds below the repo rate in early trade, dealers said.

 

The one-day call money rate is seen in the 4.80-5.25% range during the day, whereas the tri-party repo rate is expected to be in the range of 4.90–5.10%, dealers said. The weighted average call rate will be in the range of 5.25-5.30% and that in the tri-party repo market is likely to be in the band of 5.00-5.10% Tuesday, dealers said. There are no major inflows and outflows scheduled on Tuesday, hence the rate is expected to trade at a similar level. 

 

CALL RATE

4.75%--Monday close for one-day loans

5.40%--Monday open for one-day loans

5.20%--Friday close for three-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.38	5.23
3-day	--	--
14-day	5.79	5.77
1-month	5.91	5.88
3-month	6.35	6.32

 

---

India Call: Near repo rate on demand for funds as liquidity conditions ease 

 

MUMBAI – The one-day interbank call money rate hovered near the Reserve Bank of India's repo rate of 5.25% supported by the demand for funds from some banks and primary dealerships, which kept overnight rates elevated amid fall in the surplus liquidity in the banking system, dealers said. The weighted average call rate remained above the repo rate on Monday.

 

"Some banks are facing shortfalls due to a decline in liquidity surplus in the banking system. They need to maintain their cash reserve ratio requirements for the fortnight ending Friday, which has led to higher rates in the overnight market," a dealer at a public-sector bank said.

 

At 1425 IST, the one-day call rate was 5.25%, down from Monday's opening level of 5.40% but higher than Friday's close for three-day loans at 5.20%. The weighted average call rate was 5.34%, up from 5.18% at close Friday. Trade volume in the contract was INR 148.29 billion, up from 130.55 billion at 1430 IST Friday. For the rest of the day, call money rate is seen between 4.20–5.40%, dealers said.

 

The one-day tri-party repo market rate was at 5.05% at 1425 IST, down from Monday's opening of 5.11%. The weighted average tri-party repo rate was 5.15%, up from 5.10% Friday. Trade volume in the contract was INR 4.69 trillion, up from INR 4.53 trillion Friday. The lending side mainly comprised mutual funds, while some banks were borrowing for their regular cash needs, dealers said. In the tri-party repo market, rates traded near the Reserve Bank of India's Standing Deposit Facility rate, in line with the usual trend where tri-party repo rates are around 10–15 basis points lower than call money rates, dealers said. 

 

Dealers expect liquidity conditions to remain broadly unchanged until the RBI announces its dividend payout. Liquidity is likely to ease further after mid-May, when the central bank typically transfers its surplus to the government. "The market is awaiting the RBI's dividend transfer. Once that comes in, liquidity should improve significantly," a dealer at a public-sector bank said. The central bank is expected to transfer a surplus of around INR 2.5 trillion to INR 2.8 trillion to the government for financial year 2025–26 (Apr–Mar).

 

The net liquidity absorbed by the RBI--an indicator of surplus liquidity in the banking system--was INR 2.22 trillion Sunday, up from INR 2.15 trillion Saturday. Liquidity in the banking system fell due to outflows of INR 300 billion Friday for excise duty and tax deducted at source, dealers said. Banks maintained cash balances of INR 7.58 trillion as of Sunday, down from INR 7.64 trillion Saturday and lower than the average requirement of INR 7.88 trillion for the fortnight ending Friday.  (Shumaila Firoz) 

---

India Call: Up on low liquidity surplus, early demand from banks, PDs 

 

MUMBAI – The one-day interbank call money rate rose Monday and was above the Reserve Bank of India's repo rate of 5.25% as the liquidity surplus in the banking system has been reduced due to outflows for excise duty and tax deducted at sources payments, dealers said. The volume in the overnight market was sharply down due to high rate in the call market.

 

Trade volume in the call money market was INR 7.17 billion at 0930 IST, sharply lower than INR 43.20 billion at the same time on Friday. "I think volume might increase when the rate goes down," a dealer at a private sector bank said. At 0941 IST, the call money rate was at 5.40%, higher than Friday's three-day closing rate of 5.20%. The weighted average call rate was 5.40%, sharply up from 5.18% Friday.

 

"Banks were borrowing for Monday's requirements after markets remained shut over the weekend, while outflow for payment of government securities and the reversal of the four-day VRR (variable rate repo) auction also supported demand for funds," a dealer at a state-owned bank said. Outflows worth INR 340 billion for gilt auction payment and INR 107.95 billion for the reversal of VRR auction conducted on Thursday. 

 

The net liquidity absorbed by the RBI--an indicator of surplus liquidity in the banking system--was INR 2.15 trillion Friday, down from INR 2.37 trillion on Thursday. Liquidity in the banking system fell due to outflows of INR 300 billion Friday for excise duty and tax deducted at source, dealers said. Banks maintained cash balances of INR 7.64 trillion as of Friday, down from INR 7.75 trillion Thursday and lower than the average requirement of INR 7.88 trillion for the fortnight ending May 15.

 

There was also demand for funds from primary dealerships and small finance banks in early trade to meet their daily funding requirements after the two-day closure of the call market, they said. 

 

Volume in the tri-party repo market was INR 1.36 trillion at 0930 IST, up from INR 1.27 trillion at the same time Friday. Although the tri-party repo rate was higher from Friday, banks were borrowing in the tri-party repo market as rates were lower compared to those in the call money market. At 0945 IST, the one-day tri-party repo rate was 5.16%, compared with 4.80% Friday for the three-day loans, and the weighted average rate was 5.13%, higher than 5.10% Friday.

 

In the tri-party repo market, mutual funds were on the lending side, while scheduled commercial banks were borrowing funds to maintain their cash reserve ratio requirements, which banks manage daily based on overall inflows and outflows, dealers said.

 

Dealers expect the overnight call money rate near the repo rate during the day due to banks' funding requirements arising from the reversal of the four-day VRR auction as well as the need to maintain cash reserve ratio balances for the fortnight ending May 15.  (Shumaila Firoz) 

 

End 

 

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

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.