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Informist, Tuesday, Jun. 2, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate Tuesday ended above the Reserve Bank of India's repo rate of 5.25% amid tight liquidity conditions in the banking system, dealers said. The one-day call rate ended at 5.35% Tuesday, up from 4.85% Monday. The weighted average call rate was 5.28%, slightly lower than 5.30% Monday. Traded volumes in the one-day call money market were INR 180.57 billion, down from INR 240.28 billion in the previous session. The one-day tri-party repo rate ended at 4.90%, down from 5.00% Monday. The weighted average rate in the tri-party repo market was 5.20% Tuesday, up from 5.16% Monday. The one-day tri-party repo market's total transactions amounted to INR 4.79 trillion, down from INR 5.34 trillion Monday. 

 

The net liquidity absorbed by the RBI was INR 854 billion Monday, down from INR 1.39 trillion Sunday, according to the latest release. The absorption is an indication of surplus liquidity in the banking system. The surplus liquidity fell as cash balances with the RBI rose to INR 8.90 trillion Monday from INR 8.00 trillion Sunday and well above the average daily cash reserve requirement of INR 7.91 trillion needed for the fortnight ending Jun. 15. Banks maintained a higher-than-necessary amount with the RBI to keep reserves ahead of advance tax outflows scheduled at the end of the reporting fortnight, a dealer at a state-owned bank said. "At the end of the fortnight (call) rate is likely to rise higher, so we want our average to be fine during that time, so later we would be relieved from borrowing at a higher rate," the dealer said. Considering the total liquidity including cash balances, it rose Monday due to inflows from the central government as payments for pensions and salaries, a dealer at another state-owned bank said. 

 

The RBI conducted a three-day variable rate repo auction for INR 750 billion Tuesday, an auction which traders had not expected. The RBI received bids worth only INR 174.45 billion and took all of it at a cut-off rate of 5.26%. Dealers said the auction was poorly subscribed due to low rates in the tri-party repo market at the time of the auction. The tri-party repo rate traded in a narrow band of 5.17–5.21% at 0930–1000 IST, when the auction took place. 

 

The RBI likely intends to keep the weighted average call rate below a certain level, which is why the central bank conducted the ninth variable-rate repo auction in less than a month Tuesday, despite low subscription in most of the auctions, dealers said. At the RBI's Monetary Policy Committee meeting decision Friday, traders expect the central bank to announce measures to attract capital inflows or boost systemic liquidity. "We are expecting the MPC (Monetary Policy Committee) will bring some measure to increase liquidity such as OMOs (open market operations), foreign deposits," a dealer at another public sector bank said.

 

OUTLOOK

On Wednesday, the one-day interbank call money rate is likely to open near the RBI's repo rate of 5.25%, on demand for funds from primary dealerships and some banks amid low surplus liquidity in the banking system, dealers said. Dealers expect the call rate to be in the 4.60–5.35% range on Wednesday, while the tri-party repo rate is expected to be in the range of 4.90–5.25%. The weighted average call rate is expected to be in the range of 5.20-5.30%, and that in tri-party repo market is likely to be around 5.15-5.25%, they said.

 

On Wednesday, an outflow of INR 241 billion is scheduled for the payment of state bonds. The auction was conducted Tuesday. Dealers do not expect the outflow to push up overnight market rates as it is not a significant amount, dealers said. Additionally, the central bank will conduct yet another VRR of INR 500 billion for two days Wednesday, which may cap a rise in rates, dealers said. 

 

CALL RATE

5.35%--Tuesday close for one-day loans

5.35%--Tuesday open for one-day loans

4.85%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.34	5.34
3-day	--	--
14-day	5.86	5.85
1-month	6.05	6.02
3-month	6.80	6.82

 

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India Call: Slips to SDF rate; tri-party repo rate rises above 5.25%

 

MUMBAI – The one-day interbank call money rate fell to the Reserve Bank of India's Standing Deposit Facility rate of 5.00% after primary dealers and banks met their demand for funds early in the day, dealers said. The tri-party repo rate rose steadily after the result of the three-day variable rate repo auction at 0930-1000 IST and has traded above the policy repo rate of 5.25% since around 1050 IST.

 

The central bank got bids worth only INR 174 billion at the INR 750-billion auction and set a cut-off rate of 5.26%. Banks chose to meet their need for funds through the tri-party repo market as the collateralised money market's rate was below the repo rate in early trade. Liquidity conditions had improved but had been diverted to keeping higher cash balances with the RBI on Monday, which may have led to a temporary mismatch in meeting funding needs for credit and currency, dealers said. 

 

The net liquidity absorbed by the RBI – a proxy for the liquidity surplus –  was INR 854 billion Monday, down from INR 1.39 trillion Sunday, according to latest data. The surplus liquidity fell as cash balances with the RBI rose to INR 8.90 trillion Monday from INR 8.00 trillion Sunday and well above the average of INR 7.91 trillion balance needed for the fortnight ending Jun. 15. Banks usually maintain a higher cash balance with the RBI during the initial period of the fortnight in order to avoid bunching up demand towards the end of the fortnight, dealers said.

 

"I think the RBI conducted VRR today (Tuesday) to provide liquidity to those who needed funds, otherwise there is no such factor I can see for the VRR auction," a dealer at a private sector bank said.

 

At 1330 IST, the one-day call rate was at 5.00%, down from 5.35% at open but up from 4.85% at Monday's close. The weighted average call rate was 5.32%, up from 5.30% Monday. The one-day call money trade volume was INR 148.88 billion, down from INR 193.83 billion Monday at the same time. Traders expect the call money rate to cool further and the weighted average call rate to decline to around 5.30% by the end of the day.

 

At 1330 IST, the one-day tri-party repo was at 5.16%, up from 5.13% at open and 5.00% at Monday's close. The one-day tri-party weighted average rate was 5.21%, up from 5.16% Monday. The turnover in the tri-party repo market was INR 3.90 trillion, up from INR 3.85 trillion at 1330 IST Monday. Banks had diverted cash to other needs and were demanding higher rates to lend to corporates and primary dealers in the money market, dealers said. 

 

"The rates are high in the overnight market as some banks are doing arbitrage trading in forex, so the banks are lending at higher rates to get higher premium," a dealer at a public sector bank said. Lending rupees in exchange for dollars in the cash-tom market yielded banks over 7.50% at the day's high on Tuesday, after surging to nearly 10% last week. This activity had picked up in recent sessions but rates eased to more modest levels Tuesday, with the last reported trade at 1249 IST at 5.50%, according to Clearing Corp. of India data. (Durgesh Nandan)

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India Call: Up on demand for funds from PDs, banks; rate may ease during day

 

MUMBAI – The one-day interbank call money market rate was up Tuesday on demand for funds from primary dealerships and some banks to meet their regular cash requirements, dealers said. The call rate was above the Reserve Bank of India's repo rate of 5.25% amid tightened liquidity in the banking system, they said.

 

The central bank conducted a three-day variable rate repo auction for INR 750 billion at 0930-1000 IST Tuesday. The VRR auction was not in line with market expectations as the rate traded below the RBI's repo rate and surplus liquidity was way above INR 1 trillion Sunday, dealers said. The subscription at the auction is expected to be INR 263 billion bids at the cut-off of 5.26%, as per the median of the Informist poll of 15 banks. Dealers expect the bids at the auction to be between INR 100 billion and INR 700 billion. 

 

"We were expecting the RBI would conduct VRR (auction) only if (call) rate will cross MSF (Marginal Standing Facility rate of 5.50%) or at least trade near MSF (rate)," a dealer at a public sector bank said. "Maybe the RBI do not want the (surplus) liquidity to fall below 1 lakh crore (INR 1 trillion)."

 

At 0930 IST, the one-day call rate was 5.35%, sharply up from 4.85% Monday. The weighted average call rate was also 5.35%, up from 5.30% Monday. Trade volume in the call money market was INR 64.54 billion, higher than INR 39.64 billion at the same time Monday. At 0930 IST, the one-day tri-party repo rate was 5.18%, up from 5.00% Monday. The weighted average rate was 5.18%, marginally up from 5.16% Monday. The volume in the tri-party repo market was INR 1.25 trillion, up from INR 975.99 billion Monday.

 

The net liquidity absorbed by the RBI was INR 854 billion Monday, down from INR 1.39 trillion Sunday, according to the latest release. The absorption is an indication of surplus liquidity in the banking system. The liquidity surplus fell as cash balances with the RBI rose to INR 8.90 trillion, sharply higher than the average requirement of INR 7.91 trillion for the fortnight ending Jun. 15. Dealers said banks usually maintain higher cash balances with the RBI at the beginning of the fortnight, dealers said.  (Durgesh Nandan) 

 

End

 

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

 

Edited by Avishek Dutta

 

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