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Informist, Saturday, May 16, 2026

By Durgesh Nandan

MUMBAI – The two-day interbank call money rate ended sharply below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on Saturday due to low demand for funds. Trade volume was lower compared with weekdays due to low participation, which is the usual case in the overnight market on Saturdays, dealers said. Most banks and primary dealerships had already met their requirement for funds on Friday, they said.

The two-day call rate ended at 4.75%, down from Friday's close of 5.23% for three-day loans. The weighted average call rate was 4.94% down from 5.24% Friday. Trade volume in the call money market was INR 15.00 billion, sharply down from INR 140.62 billion the previous session. Despite low demand for funds, the call money rate rose to an intraday high of 5.20% around 1430 IST. However, dealers said it was a one-off due to lower volume. The total of both deals was INR 2.5 billion. Some cooperative banks borrowed the funds to meet their requirements in the call market, a dealer at a private sector bank said.

The tri-party repo market rate for two-day loans ended at 5.10%, down from 5.25% at the previous close. The weighted average rate was 5.00%, also down from 5.07% for three-day loans Friday. Volume in the broader tri-party repo market was INR 146.79 billion, sharply down from INR 5.36 trillion Friday.

As per the latest figures, the net liquidity absorbed by the Reserve Bank of India, an indication of surplus liquidity in the banking system, was INR 2.18 trillion Thursday, down from INR 2.23 trillion Wednesday. Outflows of INR 1.5 trillion to INR 2 trillion for goods and services tax payment are expected to begin on Monday, but the majority of the payment is likely to take place on Wednesday and Thursday, the dealer said.

"The surplus liquidity is expected to be around 80 thousand crore to 90 thousand crore (INR 800 billion – INR 900 billion) after the GST outflow," a dealer at a private sector bank said. Rates in the overnight markets are expected to rise to the higher end of the liquidity adjustment facility corridor if the banking system's liquidity falls below INR 1 trillion, dealers said. 

OUTLOOK

On Monday, the one-day call money rate is likely to open above the RBI's repo rate of 5.25% on early demand for funds from primary dealerships and some banks, dealers said. Outflows for GST payments will also keep the call rate above the RBI's repo rate Monday. The call rate is expected to trade in the range of 4.80–5.35% during the day, whereas the tri-party repo rate is expected in the range of 4.70–5.20%.

However, the RBI's measure to provide transient liquidity through seven-day variable rate repo auction scheduled Monday between 0930 IST to 1000 IST for INR 1 trillion is likely to keep the call rate below the RBI's repo rate. Earlier this month, the central bank had infused INR 179.85 billion through two VRR auctions. Dealers expect the rates to soften in the overnight market, if the auction is fully subscribed.

CALL RATE

4.75%--Saturday close for two-day loans

4.90%--Saturday open for two-day loans

5.23%--Friday close for three-day loans

End
 

Edited by Akul Nishant Akhoury

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