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Informist, Tuesday, May 19, 2026

By Shumaila Firoz 

MUMBAI – The one-day interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 5.00% Tuesday despite low surplus liquidity in the banking system. The rate softened after banks and primary dealers met their needs in the first half of the day, with no significant goods and services tax outflows from the system Tuesday, dealers said. 

The one-day call money rate ended at 4.70% Tuesday, sharply down from 5.30% at the open and also lower than 5.18% at the close Monday. The weighted average rate was 5.21%, higher than 5.18% Monday. The volume in the one-day call contract was INR 150.11 billion, down from INR 173.03 billion Monday. The call money rate traded was between 4.60% and 5.30% through the day.

The net liquidity absorbed by the RBI--an indicator of surplus liquidity in the banking system--was INR 1.82 trillion Monday, up from INR 1.42 trillion Sunday. Banks drew down their cash balances with the RBI by around INR 800 billion overnight, though the settlement of the INR-320-billion gilt auction conducted Friday capped the increase in the surplus with banks. Some state-owned bankers unusually turned borrowers in the call money market to finance credit offtake as liquidity conditions were less than comfortable, dealers said.

Dealers expect that liquidity conditions will tighten and potentially turn into a deficit due to large tax-related outflows. GST payments are expected to drain between INR 1.8 trillion and INR 2 trillion from the banking system by Thursday, dealers said. This will keep the pressure up on money market rates, even as more RBI support was expected, they said.

"Tomorrow (Wednesday), around 80 thousand crore (INR 800 billion) outflow is expected for GST and rest will take place on Thursday," a dealer at a public-sector bank said. "We expect the weighted average rates to rise by 4 to 5 bps (basis points) in both the markets (call money and tri-party repo market)."

After market hours Tuesday, the RBI announced it would conduct a five-day, INR 1.50-trillion variable rate repo auction at 0930-1000 IST Wednesday. Moreover, the central bank board will likely meet Friday to finalise its accounts for 2025-26 (Apr-Mar) and decide on its surplus transfer to the government, which adds to durable liquidity. The finance ministry hopes to get a record surplus transfer of over INR 3.00 trillion from the RBI, a senior official told Informist.

"...rates may remain elevated for the next 2–3 days due to tight liquidity and GST outflows potentially pushing system liquidity below INR 1 trillion, (but) after the RBI dividend liquidity in the banking system is expected to remain in surplus..." a dealer at a private-sector bank said. 

The one-day tri-party repo rate ended at 5.09% Tuesday, up from 4.80% Monday. The weighted average rate was 5.07%, unchanged from Monday. The volume in the tri-party repo contract was INR 5.36 trillion, down from INR 5.61 trillion Monday. The tri-party rate opened at 5.08% and traded in 4.96% to 5.13% range. 

"Mutual funds are moving towards the CD (certificates of deposit) market as it offers relatively higher returns than the tri-party repo segment, which could lead to lower volumes in the overnight market and exert upward pressure on rates," the public-sector bank dealer quoted above said.

OUTLOOK

Wednesday, the one-day interbank call money rate is likely to open above the RBI's repo rate of 5.25% due to early demand for funds from primary dealerships and some banks. Liquidity conditions have tightened from a comfortable surplus in April and GST payments will likely drain around INR 800 billion of liquidity Wednesday, dealers said.

The RBI's five-day, INR 1.50 trillion VRR auction may be subscribed more than 60% as banks are likely to borrow from the RBI to fund the outflows. The large liquidity injection from the central bank was widely expected and may help keep the call money rate near the repo rate, dealers said.  

The one-day call money rate is seen in the 4.80–5.35% range Wednesday. The tri-party repo rate is expected to be in the range of 4.90–5.15%, dealers said. The weighted average call rate will be in the range of 5.20-5.35% and in the tri-party repo market, it is likely to be in the 5.00-5.20% band, they said.

CALL RATE

4.70%--Tuesday close for one-day loans

5.30%--Tuesday open for one-day loans

5.18%--Monday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Near repo rate on low liquidity, demand for loans from cos 

MUMBAI – The one-day interbank call money rate hovered around the repo rate of 5.25% Tuesday due to low liquidity surplus in the banking system and demand for funds from the bank following good and services tax outflows, dealers said. The weighted average call rate was also near the repo rate.    

With corporates witnessing strong demand for funds, banks have also stepped up borrowing to meet credit requirements, keeping overnight rates high in the earlier session. "Strong corporate demand for funds has led banks to borrow at relatively higher rates to meet credit requirements," a dealer at a public-sector bank said.

At 1348 IST, the one-day call rate was 5.15%, down from Tuesday's opening level of 5.30% and marginally down from Monday's close of 5.18%. At 1330 IST the weighted average call rate was 5.25%, up from 5.22% Monday. Trade volume in the contract was INR 118.73 billion, largely unchanged at the same time Monday. For the rest of the day, the call rate is likely to trade between 4.60% and 5.30%. 

At 1348 IST, the one-day tri-party repo market rate was at 5.00%, down from Tuesday's opening level of 5.08% and up from Monday's close of 4.80%. At 1330 IST the weighted average tri-party repo rate was 5.09%, down from 5.11% Monday. Trade volume in the contract was INR 4.27 trillion, down from INR 4.41 trillion Monday. 

The net liquidity absorbed by the RBI--an indicator of surplus liquidity in the banking system--was INR 1.82 trillion Monday, up from INR 1.42 trillion Sunday. The liquidity surplus increased as banks' cash balances with the RBI fell to INR 7.88 trillion Monday from INR 8.67 trillion Sunday. Meanwhile, inflows of INR 160.50 billion through the variable rate repo auction Monday supported system liquidity, although the impact was limited due to weak subscription. Liquidity in the banking system improved marginally compared with the previous session, but the increase was limited due to outflows related to the government bond auction of INR 350 billion Monday, dealers said.

Dealers said goods and services tax outflows are expected to drain out around INR 200 billion to INR 300 billion Tuesday, with a sharper outflow of INR 800 billion to INR 1 trillion likely on Thursday, which could further tighten liquidity conditions. "GST outflows of around 20 to 30 thousdand crore (INR 200 billion to INR 300 billion) Tuesday and up to INR 1 trillion on Thursday are expected to significantly drain liquidity from the system," a dealer at another public-sector bank said.

"If rates in the secured segment move above the repo rate, the RBI may conduct a variable rate repo auction in the range of INR 750 billion to INR 1 trillion to infuse liquidity," a dealer at a public sector bank said.  (Shumaila Firoz) 

India Call: Up on low liquidity surplus, early demand ahead of GST outflow

MUMBAI – The one-day interbank call money rate rose Tuesday and was above the Reserve Bank of India's repo rate of 5.25%. The rise in the call rate was due to low surplus liquidity in the banking system and demand for funds from banks due to goods and services tax outflow, dealers said.

There is demand for funds Tuesday on the back of GST outflows, with a significant portion expected to be front-loaded. "Nearly 30–40% of the GST-related outflows are anticipated to take place today, leading to increased demand for funds in the market," a dealer at a private sector bank said. Dealers expect outflows of INR 1.8 trillion to INR 2 trillion for GST payments this week.  

At 0915 IST, the one-day call rate was 5.30%, up from 5.18% Monday. The weighted average call rate was also 5.30%, up from 5.18% Monday. At 0930 IST, the trade volume in the call money market was INR 43 billion, higher than INR 200 million at the same time Monday. There was more demand for funds from primary dealerships and banks due to low liquidity surplus in the banking system, dealers said. Some banks were also borrowing to meet their requirements for credit offtake and redemption of certificates of deposit, they said. 

The net liquidity absorbed by the RBI--an indicator of surplus liquidity in the banking system--was INR 1.82 trillion Monday, up from INR 1.42 trillion Sunday. The liquidity surplus increased as banks' cash balances with the RBI fell to INR 7.88 trillion Monday from INR 8.67 trillion Sunday. Meanwhile, inflows of INR 160.50 billion through the variable rate repo Monday supported the system's liquidity, although the impact was limited due to the weak subscription.

At 0925, the one-day tri-party repo rate was 5.13%, up from 4.80% Monday. The weighted average rate for tri-party repo was 5.10%, up from 5.07% Monday. At 0930 IST, the volume in the tri-party repo market was INR 1.93 trillion, up from INR 1.82 trillion at the same time Monday.  (Shumaila Firoz) 

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

Edited by Akul Nishant Akhoury

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