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Informist, Wednesday, Jun. 3, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate ended below the Reserve Bank of India's standing deposit facility rate of 5.00% Wednesday as demand for funds declined later in the day amid surplus liquidity in the banking system, dealers said. The surplus liquidity being above INR 1 trillion put banks in a comfortable position. However, as the surplus has generally been on a downtrend, the weighted average call money rate ended above the repo rate for the ninth session, barring Saturday.

 

The one-day call rate ended at 4.75%, down from 5.35% Tuesday. The weighted average call rate was 5.27%, marginally down from 5.28%. The traded volume in the call money market was INR 162.35 billion, down from INR 180.57 billion in the previous session. The one-day tri-party repo rate ended at 4.80%, down from 4.90% Tuesday. The weighted average rate in the tri-party repo market was 5.13%, also down from 5.20% Tuesday. The tri-party repo market's total transactions amounted to INR 5.01 trillion, up from INR 4.79 trillion Tuesday.

 

The RBI net absorbed INR 1.12 trillion Tuesday from the banking system, up from INR 854 billion Monday, as per the latest release. The net liquidity absorption indicates surplus liquidity in the banking system. Dealers said banks were comfortable with the current surplus liquidity. They kept around INR 800 billion more than the required cash reserve with the RBI. The liquidity surplus rose as cash balances with the RBI fell to INR 8.70 trillion Tuesday from INR 8.90 trillion Monday.

 

"Banks are eager to maintain surplus (cash balance) in the CRR (cash reserve ratio) so by the end of the reporting fortnight, when advance tax outflow is scheduled, they will not have to rush for funds," a dealer at a state-owned bank said.

 

The central bank has conducted 10 variable rate repo auctions in less than a month and infused transient liquidity of INR 3.70 trillion. Of this, INR 3.40 trillion has already been reversed and only INR 288 billion is left, which will be reversed Friday. The central bank conducted a three-day VRR auction Tuesday and a two-day auction Wednesday. Dealers expect the RBI to roll over the VRR auction that will be reversed Friday, by conducting an operation for INR 1 trillion for a tenure of three days to maintain the surplus liquidity near INR 2 trillion. The central bank accepted all INR 113.60-billion bids at the cut-off rate of 5.26% at Wednesday's two-day VRR auction. Dealers said a VRR auction for Thursday was unlikely, with two auctions already conducted and due for reversal only Friday.

 

"The way RBI is conducting VRR (auctions), no one knows when the next auction will happen, but I think they will conduct a three-day VRR (auction) to offset reversal of two VRR (auctions) on Friday," a dealer at another state-owned bank said.

 

OUTLOOK

On Thursday, the one-day interbank call money rate is likely to open near the RBI's repo rate of 5.25% or above, as has been the case so far this week with surplus liquidity generally on a downtrend, dealers said. Dealers expect the call rate to be in the 4.60–5.45% range. The tri-party repo rate is expected to be in the range of 4.90–5.30%. The weighted average call rate is expected to be in the range of 5.25-5.30%, and the weighted average rate in tri-party repo market is likely to be around 5.10-5.15%, they said.

 

Inflows of Treasury bill redemptions and bond coupon payments Thursday will be partially offset by payment for 91-day T-bills worth INR 151 billion. The size of the outflow reduced by INR 120 billion after the RBI did not accept any bid for the 182-day and 364-day T-bills at the auction Wednesday, boding well for systemic liquidity, dealers said.

 

CALL RATE

4.75%--Wednesday close for one-day loans

5.35%--Wednesday open for one-day loans

5.35%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.33	5.34
3-day	--	--
14-day	5.91	5.86
1-month	6.09	6.05
3-month	6.80	6.80

 

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India Call: Falls below RBI's repo rate on low demand amid surplus liquidity

 

MUMBAI – The one-day interbank call money rate fell below the Reserve Bank of India's repo rate of 5.25?ter primary dealerships and banks met their demand for funds early trade amid surplus liquidity in the banking system, dealers said. The RBI conducted a two-day variable rate repo auction for INR 500 billion to push the weighted average call rate below the repo rate, they said.

 

The auction was poorly subscribed as only 23% of the notified amount was bid. The RBI took all INR 113.60 billion of bids at a cut-off rate of 5.26%. Rates in both the call and tri-party repo markets eased after the auction. The tri-party repo rate traded at 5.19–5.23% during the auction, so banks preferred the tri-party market over the auction to meet their cash requirements, dealers said.

 

"Even we do not understand why they (the RBI) are conducting so many VRR (auctions), when there is no outflows scheduled and rates, liquidity both are at decent levels," a dealer at a public sector bank said. "These frequent VRR (auctions) shows that the RBI wants to keep the (surplus) liqudity around 2 lakh crore."

 

At 1305 IST, the one-day call rate was at 5.15%, down from 5.35% at open and Tuesday's close. The weighted average call rate was 5.32%, up from 5.28% Tuesday. The one-day call money trade volume was INR 128.61 billion, down from INR 130.43 billion Tuesday at 1230 IST. The call rate rose to an intraday high of 5.40% during the day. 

 

At 1305 IST, the one-day tri-party repo was 5.09%, down from 5.15% at open but up from 4.90% at Tuesday's close. The one-day tri-party weighted average rate was 5.18%, slightly lower than 5.20% Tuesday. The turnover in the tri-party repo market was INR 3.81 trillion, up from INR 3.37 trillion at 1230 IST Tuesday. The tri-party repo rate was at 5.12-5.23% till noon. 

 

"The tri-party repo rate is likely to rise later in the day, as the VRR (auction) was not subscribed, so as per lenders point of view, there could be demand during the last hour of the market, which would lead to a rise in rate," a dealer at another public sector bank said.

 

The net liquidity absorbed by the RBI -- an indication of surplus liquidity -- was INR 1.12 trillion Tuesday, up from INR 854 billion Monday, according to the latest release. Dealers said the banks were comfortable with the current surplus liquidity. Banks kept around INR 800 billion more than the required cash reserve with the RBI. The liquidity surplus rose as cash balances with the RBI fell to INR 8.70 trillion Tuesday from INR 8.90 trillion Monday. The cash balances with the RBI were up sharply from the average requirement of INR 7.91 trillion for the fortnight ending Jun. 15.

 

The only major scheduled outflow for the day was INR 241 billion for the payment of state bonds. There will not be any major impact on liquidity due to this outflow as it is a small amount compared to tax outflows, the dealer at the state-owned bank said.  (Durgesh Nandan)

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India Call: Rises on demand for funds from primary dealerships, some banks

 

MUMBAI – The one-day interbank call money market rate was higher than the Reserve Bank of India's repo rate of 5.25% Wednesday due to early demand for funds from primary dealerships and some banks to meet their regular cash requirements, dealers said. The tri-party repo rate for one-day loans was below the repo rate as the liquidity surplus rose over INR 1 trillion Tuesday. 

 

At 0930 IST, the one-day call rate was 5.35%, unchanged from Tuesday. The weighted average call rate was also 5.35%, up from 5.28% Tuesday. Trade volume in the call money market was INR 65.54 billion, slightly higher than INR 64.54 billion at the same time Tuesday. At 0930 IST, the one-day tri-party repo rate was 5.18%, up from 4.90% Tuesday. The weighted average rate was 5.18%, marginally down from 5.20% Tuesday. The volume in the tri-party repo market was INR 987.72 billion, down from INR 1.25 trillion Tuesday.

 

The net liquidity absorbed by the RBI -- an indication of surplus liquidity -- was INR 1.12 trillion Tuesday, up from INR 854 billion Monday, according to the latest release. The liquidity surplus rose as cash balances with the RBI fell to INR 8.70 trillion Tuesday, from INR 8.90 trillion Monday. The cash balances with the RBI were sharply higher than the average requirement of INR 7.91 trillion for the fortnight ending Jun. 15.

 

The central bank conducted a two-day variable rate repo auction for INR 500 billion at 0930-1000 IST Wednesday to support the banking system liquidity amid forex intervention by the RBI, dealers said. "The RBI is conducting VRR (auctions) so frequently, maybe to offset the impact caused by selling dollars as they have been doing this to protect rupee," a dealer at a private sector bank said. "They are also monitoring the rates (call and tri-party rate) and the liquidity in the banking system closely."

 

The subscription at the auction is expected to be INR 212.5 billion at the cut-off of 5.26%, as per the median of the Informist poll of 14 market participants. Dealers expect the bids at the auction to be between INR 75 billion and INR 275 billion. 

 

The VRR auction was, however, not in line with the market participants' expectations as the rates in both the call and tri-party repo market were around the RBI's repo rate Tuesday.  (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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