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Informist, Tuesday, May 26, 2026

 

By Durgesh Nandan

MUMBAI – The one-day interbank call money rate ended above the Reserve Bank of India's repo rate of 5.25% on low surplus liquidity in the banking system, dealers said. Several banks borrowed funds in the last hour, mainly to meet disbursal requirements, which pushed the call rate up, they said.

 

In the call money market, from 1800 IST to 1839 IST, six trades, adding up to INR 3.50 billion, were effected at a higher rate because there were fewer lenders in the market after the tri-party repo market shut at 1600 IST, dealers said. The tri-party repo rate ended at its highest level since Jan. 26 as lenders rushed for funds in the last hour of the tri-party repo market, they added.

 

The one-day call rate ended at 5.30%, down from 5.35% Monday. The weighted average call rate was 5.35%, almost unchanged from Monday. The one-day call money trade volume was INR 142.82 billion, down from INR 163.33 billion Monday. The one-day tri-party repo rate ended at 5.40%, sharply up from 5.09% Monday. The weighted average rate in the tri-party repo market was 5.18%, down from 5.21% Monday. The turnover in the tri-party repo market was INR 5.35 trillion, slightly up from INR 5.34 trillion Monday.

 

The net liquidity absorbed by the RBI remained under INR 1 trillion for the fifth consecutive day. According to the latest data, the RBI absorbed INR 672.85 billion Monday, up from INR 552.86 billion Sunday. The RBI's net absorption is an indication of the surplus liquidity in the banking system. Banks maintained INR 7.79 trillion in cash balances with the RBI Monday, down from INR 7.90 trillion Sunday.

 

Dealers expect the surplus liquidity to cross the INR 2 trillion mark, which banks consider comfortable liquidity, only after the inflows from the government in the form of salaries and pensions at the month-end. The RBI's record surplus transfer of INR 2.87 trillion for the financial year 2025-26 (Apr-Mar) is likely to be credited to the government's account by the end of May or in the first week of June, dealers said.

 

Dealers had divergent views on whether the RBI would conduct a variable rate repo auction this week. Most of the dealers expected the RBI to conduct a two-day VRR auction for INR 1 trillion to INR 1.5 trillion to support the liquidity. Only a few said it is unlikely for the RBI to come up with a VRR auction this week as the government's routine month-end spending is likely to kick in and improve liquidity conditions.

 

"It is less likely for the RBI to conduct any VRR (auction) this week," a dealer at a large state-owned bank said. "Only if the TREPs (tri-party repo rate) would trade like it traded during the last hour, then they (the RBI) will conduct the auction to cool off rates in the overnight market."

 

OUTLOOK

On Wednesday, the two-day interbank call money rate is likely to open above the RBI's repo rate of 5.25% owing to early demand from primary dealers and some banks, dealers said. A few dealers expect the RBI to come up with a variable rate repo auction Wednesday as the surplus liquidity remains under INR 1 trillion and the weighted average call rate may be above the policy repo rate.

 

Dealers expect the call rate to be in the 4.70–5.50% range 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 5.25-5.35% 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

5.30%--Tuesday close for one-day loans

5.45%--Tuesday open for one-day loans

5.35%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.43	5.43
3-day	--	--
14-day	5.82	5.83
1-month	5.97	5.95
3-month	6.66	6.58

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India Call: Below RBI SDF rate on low demand, no major outflows

 

MUMBAI – The one-day interbank call money rate fell below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as the early rush for funds eased and as there weren't any major outflows scheduled for the day, dealers said. The rate slipped as primary dealerships and banks met their cash needs at the start of the day, they said.

 

At 1430 IST, the one-day call rate was 4.95%, down from 5.45% at the open and 5.35% Monday. The weighted average call rate was 5.38%, unchanged from the same time on Monday. The weighted average rate remained above the RBI repo rate as initial trades were at a higher rate and also because there was no RBI variable rate repo auction Tuesday, contrary to market expectations, dealers said. The one-day call money trade volumes were INR 125.90 billion, down from INR 140.57 billion at the same time Monday.

 

Most dealers expect the RBI to conduct a three-day VRR auction Friday for INR 1 trillion - INR 1.5 trillion to roll over the INR 887.45 billion it had infused Monday through a four-day VRR auction.

 

At 1430 IST, the one-day tri-party repo rate was 5.17%, down from 5.23% at the open but up from 5.09% at close on Monday. The tri-party weighted average rate was 5.17%, down from 5.21% Monday. The turnover in the tri-party repo market was INR 4.68 trillion, almost unchanged from the same time Monday. Some public-sector and private-sector banks were on the borrowing side in the tri-party repo market, a dealer at a public sector bank said. Banks borrowed for usual credit outflow requirements in the tri-party overnight market, dealers said.  

 

"Our bank is borrowing in TREPs (tri-patry repo market) and lending in the call market, and we have no such pressure to maintain the CRR (cash reserve ratio) for fortnight-ending (on May 31)," a dealer at another state-owned bank said.

 

Dealers expect the call rate to fall further later in the day, as the tri-party repo rate is already below the repo rate and most volumes have already been traded by noon. For the rest of the day, the call rate is likely to move between 4.60% and 5.35%. The one-day call rate might rise for a few trades after the tri-party repo market shuts at 1600 IST.  (Durgesh Nandan)

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

 

MUMBAI – The one-day interbank call money rate opened higher Tuesday mainly due to low surplus liquidity in the banking system, dealers said. Demand for funds at the start of trading also pushed the rate near the Reserve Bank of India's Marginal Standing Facility rate of 5.50%, they said. Primary dealerships and a few banks were borrowing to meet their daily payment obligations, they said. For three consecutive trading sessions, the call rate has opened at 5.45% which is way above the Reserve Bank of India's repo rate of 5.25%. This is also closer to the ceiling of the Liquidity Adjustment Facility corridor of 5.50%.

At 0930 IST, the one-day call money rate was 5.45%, higher than 5.35% Monday. The weighted average call rate was 5.44%, also higher from 5.36% Monday. One-day call money traded volumes were INR 53.49 billion, sharply up from INR 3.00 billion at the same time Monday. At 0930 IST, the one-day tri-party repo rate was 5.18%, up from 5.09% Monday. The tri-party repo weighted average rate inched up slightly to 5.23% from 5.21% Monday. The turnover in the tri-party repo market was INR 371.20 billion.

 

"After the swap auction and government month end spending, the overnight rates will cool down, and the rates will trade below the repo rate," a dealer at a private sector bank said. 

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 672.85 billion Monday, down from INR 552.86 billion Sunday, according to latest data. Liquidity increased slightly Monday due to coupon payments and redemptions of state bonds totalling INR 114.94 billion and coupon payments on gilts of INR 60.27 billion. Monday, banks maintained INR 7.79 trillion in cash balances with the RBI, down from INR 7.90 trillion Sunday.       

 

Dealers expect the surplus liquidity will rise by the first week of June. "After the government's month-end spending, the (surplus) liquidity would cross the 2 lakh crore (INR 2 trillion) level, which is comfortable liquidity for the banking system," a dealer at another private sector bank said. 

 

Liquidity is likely to be comfortable after the RBI conducts a dollar-rupee buy-sell swap auction for $5 billion for three years, dealers said. Most dealers said after the swap it is unlikely the RBI will conduct any more variable rate repo auctions, despite the surplus liquidity remains constrained. (Durgesh Nandan)

 

End

 

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

 

Edited by Rajeev Pai

 

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