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Informist, Friday, May 22, 2026

 

--India's 3-day call ends at 5.37% Fri, highest close since Mar 30

 

By Aaryan Khanna

NEW DELHI – The interbank call money rate on Friday ended at its highest level since Mar. 30 as goods and services tax outflows drained already tight surplus liquidity in the banking system, with some banks borrowing to meet their cash requirements for the weekend, dealers said. The three-day rate ended above the Reserve Bank of India's repo rate of 5.25%, recovering from an intraday dip, as banks sought uncollateralised funds near the close.

 

"Some banks do not have enough securities to offer at VRR or TREPS (variable rate repo or triparty repos), that's why they are using the call market even at this hour," a dealer at a state-owned bank said. "Usually, all of this is settled at a low rate, but these days, because of liquidity, probably the lenders are also asking for more returns."

 

The three-day call money rate ended at 5.37% Friday, up from 5.27% for one-day loans Thursday. The call money rate had opened at 5.45% and risen to the Marginal Standing Facility rate of 5.50% in early trade, before slumping to 4.60% in the afternoon. The weighted average rates for Friday and Thursday were the same as the closing level, at 5.37% and 5.27%, respectively. The volume in the three-day call contract was INR 199.54 billion, up from INR 186.75 billion in the overnight contract Thursday.

 

The three-day tri-party repo rate ended at 5.24%, up from the opening level of 5.20% but lower than Thursday's close of 5.30% for one-day loans. The weighted average rate was 5.26%, up from 5.20% Thursday. The volume in the most-traded tri-party repo contract rose slightly to INR 5.34 trillion Friday from INR 5.25 trillion the previous day. During the day, it triparty repo rate traded between 4.90% and 5.35% range.

 

"Call rates were higher in the morning because of how TREPS (triparty repos) was behaving, near or above the repo (rate). That's why banks were forced to borrow in the VRR (variable rate repo) auction as well," a dealer at a private-sector bank said. "Mutual funds may be facing some redemptions. It's not that they were not willing to lend, but they didn't have funds to keep up with all the demand."

 

The RBI accepted all bids of INR 815.90 billion at the three-day, INR 1.00 trillion VRR auction Friday. The central bank set the minimum cut-off rate of 5.26% at the auction. This was the best-subscribed VRR auction this week, with even Thursday's overnight liquidity injection drawing bids worth only INR 253.60 billion, which reversed Friday.

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 588.76 billion Thursday, the lowest since Mar. 26 and down from INR 1.29 trillion Wednesday, according to the latest data. This was due to the impact of GST payments totalling over INR 1.2 trillion on Wednesday and Thursday, dealers said.

 

Though traders had expected around INR 500 billion to be paid Friday, the final amount may have been lower than that, dealers said. Still, data may reflect that systemic liquidity fell to near-neutral or even into a deficit on Friday as the RBI's liquidity injections increased following the VRR auction, they said.

 

OUTLOOK

Money markets are closed on Saturday. On Monday, the one-day interbank call money rate is likely to open above the RBI's repo rate of 5.25%. Liquidity in the banking system is expected to be near neutral or slightly in deficit after Friday's outflows for GST payments, dealers said.

 

Early demand for funds from primary dealerships and the low cash surplus with banks may push the call money rate even to the MSF rate of 5.50?rly in the day, though the central bank's VRR auction would limit the rise later, dealers said. After market hours Friday, the RBI announced it would conduct a four-day VRR auction for INR 1.50 trillion at 0930-1000 IST Monday. The auction will have a subscription of at least INR 500 billion as banks roll over their borrowed cash from previous VRRs and with no scheduled inflows until mid-week, dealers said.

 

Dealers expect the call rate to be around 4.80-5.50% during the day, while the tri-party repo rate is expected to be in the range of 5.00–5.35%. The weighted average call rate is expected to be in the range of 5.20-5.35% Monday, while the weighted average tri-party repo market rate is likely to be in the range of 5.15-5.30%, they said.  

 

CALL RATE

5.37%--Friday close for three-day loans

5.45%--Friday open for three-day loans

5.27%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.43	5.33
3-day	--	--
14-day	5.87	5.85
1-month	5.93	5.92
3-month	6.53	6.46

 

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India Call: Falls below RBI's SDF rate as 3-day VRR gets 82% subscription

 

MUMBAI – The three-day interbank call money rate fell below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds eased post a three-day variable rate repo auction for INR 1 trillion. The RBI took all INR-815.90-billion bids at a cut-off rate of 5.26%. The auction was subscribed for nearly 82% of the notified amount, the highest among six VRR auctions conducted earlier this month. The call money rate may rise towards the market close at 1900 IST as some banks step up to meet their three-day funding requirements, dealers said.   

 

At 1430 IST, the three-day call-money rate was 4.95%, sharply down from Friday's opening at 5.45% and also down from 5.27% Thursday for one-day loans. However, the weighted average call rate was near the marginal standing facility rate of 5.50% due to initial borrowing at a higher rate. The weighted average call rate was 5.39%, higher than 5.27% Thursday. Trade volume in the call money market was INR 156.81 billion.

 

"Today (Friday) some small private sector banks and foreign banks were borrowing funds from us in the call market to fulfil their requirements," a dealer at a public sector bank said. "So banks are not borrowing only for GST outflow."

At 1430 IST, the three-day tri-party repo rate was at 5.24%, higher than the opening level of 5.20%, but lower than Thursday's close of 5.30%. The weighted average rate was 5.27%. The volume in the tri-party repo market was INR 4.36 trillion.

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 588.76 billion Thursday, the lowest since Mar. 26 and down from INR 1.29 trillion Wednesday, according to the latest data. So far during this week, around INR 900 billion worth of outflows for GST payments have occurred, dealers said. Outflows worth INR 300 billion – INR 400 billion for payment of GST are likely to take place Friday, they said. The liquidity is expected to be in a comfortable position after the RBI conducts a dollar/rupee buy/sell swap auction of $5 billion for a tenure of three years, dealers said.  

 

"The call rate will only cross MSF (rate) if there is a liquidity crunch in the (banking) system," a dealer at a private sector bank said. "If the RBI does not come up with another VRR on Monday, then there is a slight chance that the call rate could cross MSF."

 

On asking why the RBI is conducting so many VRRs despite low subscription, a dealer at a private sector bank said "...(The) RBI is conducting so many VRRs just to give confidence to the market and keep the liquidity in a comfortable position." 

 

So far, the central bank has infused a total of INR 1.57 trillion of transient liquidity through six VRR auctions in May. Friday's 3-day auction was the first one to be subscribed over 50%. However, the dealers expect the RBI to come up with another VRR auction Monday, for overnight to 1–2 days tenure and an amount of INR 1 trillion – 1.5 trillion, as surplus liquidity is still low in the banking system, dealers said. The rates in the overnight market are likely to trade near the higher side of the liquidity adjustment facility corridor, if the central bank does not conduct another auction, they said.  (Durgesh Nandan)

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India Call:Sharply up as liquidity surplus below INR-1-tln amid GST outflows

 

MUMBAI – The three-day interbank call money rate was sharply up Friday as the liquidity surplus fell below the crucial INR 1 trillion. Low liquidity surplus and firm demand for funds amid outflows of goods and services tax payment and three-day borrowing pushed the call money rate toward the higher end of the liquidity adjustment facility corridor, dealers said. The tri-party repo rate was also above the Reserve Bank of India's repo rate of 5.25% Friday due to firm demand for funds. 

At 0930 IST, the three-day call money market rate was 5.45%, higher than 5.27% Thursday for one-day loans. The call rate opened at 5.45%, highest since Mar. 30. The weighted average call rate was also at 5.45%, higher from 5.27% the previous day. Trade volume in the call money market was INR 44.75 billion, up from INR 43.63 billion the last session at the same time.

 

At 0930 IST, the three-day tri-party repo rate was 5.27%, down from 5.30% Thursday for one-day loans. The weighted average rate was 5.26%, higher from 5.20% in the previous session. The turnover in the tri-party repo market was INR 1.67 trillion.

 

To support the low surplus liquidity, the central bank will conduct a fourth variable rate repo auction this week. The RBI conducted a three-day VRR auction for INR 1 trillion from 0930 IST to 1000 IST Friday. The subscription at the three-day VRR auction is seen at INR 550 billion with cut-off at 5.26%, according to an Informist poll.  

 

"The overnight market rates are high today (Friday) because of low (surplus) liquidity in the banking system due to GST outflow," a dealer at a private sector bank said. "We have heard that around 1 lakh crore (INR 1 trillion) outflows for GST went from the banking system."

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 588.76 billion Thursday, the lowest since Mar. 26 and down from INR 1.29 trillion Wednesday, according to the latest data. So far during this week, around INR 900 billion worth of outflows for GST payments were seen. Dealers expect remaining outflows of total INR 1.8 trillion to INR 2.0 trillion for GST payments to take place Friday.

 

For the day, the call rate is expected to remain near the RBI' Marginal Standing Facility rate of 5.50% but dealers said it is unlikely to surpass 5.50% due to continuous liquidity infusion measures by the RBI, supporting the liquidity. The call rate is expected at 4.80-5.50% and that in the tri-party repo market is likely to be at 4.90-5.30% Friday, dealers said. (Durgesh Nandan)

End

 

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

 

Edited by Saji George Titus

 

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