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Informist, Friday, Jun. 5, 2026

 

By Durgesh Nandan

 

MUMBAI – The three-day interbank rate ended above the Reserve Bank of India's repo rate of 5.25% due to demand for funds from banks to meet cash needs and also to maintain the cash reserve ratio during the first week of the month, dealers said. The call rate fluctuated throughout the day following the Monetary Policy Committee's announcements on Friday.

 

The MPC kept the repo rate unchanged Friday, in line with market expectations. RBI Governor Sanjay Malhotra said Friday that the central bank "would ensure appropriate liquidity in the banking system to meet the productive requirements of the economy." However, amid a bonanza of measures announced to shore up foreign capital, which will effectively boost rupee liquidity, dealers do not expect any other liquidity measures in the near term, apart from variable-rate repo auctions, they said. 

 

"As of now, we do not expect anything else other than VRR (variable rate repo) from the RBI to infuse liquidity in the banking system," a dealer at a state-owned bank said. "Even though they (the RBI) said they will provide liquidity in today's meeting (Friday's MPC)." 

 

The three-day call rate ended at 5.35% Friday, up from 5.20% Thursday for one-day loans. The weighted average call rate was above the repo rate at 5.31%, higher than 5.27% Thursday. The traded volume in the call money market was INR 177.66 billion, down from INR 182.89 billion in the previous session.

 

"The call rate was high before the policy, as banks were uncertain about the policy (rate), so they borrowed at a higher rate in the morning due to the uncertainty," a dealer at a state-owned bank said.

 

The three-day tri-party repo rate ended at 5.21%, up from 5.00% Thursday for one-day loans. The weighted average rate in the tri-party repo market was 5.18%, up from 5.04% Thursday. The tri-party repo market's total volume was INR 5.29 trillion Friday, up from INR 4.76 trillion Thursday. The tri-party repo rate rose to an intraday high of 5.50% in the last half an hour of the session.

 

"The high demand for funds spiked the rates in the market (both call and tri-party market) later in the day as banks would try to maintain more (more than average requirements) with the RBI during the weekend," a dealer at another state-owned bank said. "During the first week, banks usually keep a higher amount in CRR (cash reserve ratio) to reduce pressure later." 

 

The RBI net absorbed, a proxy for liquidity surplus, INR 1.89 trillion Thursday from the banking system, up from INR 1.71 trillion Wednesday. The liquidity grew as cash balances with the RBI fell to INR 7.90 trillion Thursday, from INR 8.01 trillion Wednesday. 

 

OUTLOOK

The two-day interbank call money rate Saturday is likely to open below the RBI's repo rate of 5.25%, on sluggish demand for funds, as is the usual case on Saturdays. Generally, most banks fulfil their cash requirements on Friday, so there would be minimal demand for funds, dealers said. Dealers expect the call rate to be in the 4.60–5.20?nd. The tri-party repo rate is expected to be in the range of 4.90–5.15%. The weighted average call rate is expected to be in the range of 4.75-5.10%, and the weighted average rate in the tri-party repo market is likely to be around 4.50-5.05%, they said.

 

Post market hours, the RBI said it will conduct a four-day variable rate repo auction for INR 750 billion Monday. 

  

CALL RATE

5.35%--Friday close for three-day loans

5.35%--Friday open for three-day loans

5.20%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.36	5.33
3-day	--	--
14-day	5.90	5.92
1-month	6.12	6.13
3-month	6.80	6.80

 

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India Call: Below repo rate as no major outflows, RBI to maintain liquidity

 

MUMBAI – The three-day interbank call money rate eased during the day as demand fell after primary dealerships and some banks met their cash needs in early trade, dealers said. The Reserve Bank of India's Monetary Policy Committee left the policy repo rate unchanged at 5.25% Friday despite the fear of inflation rising in the wake of the continuing war in West Asia. The three-day call money rate was below the RBI's repo rate of 5.25% owing to a lack of major outflows amid surplus liquidity in the banking system, they added.

 

At 1340 IST, the three-day call rate was at 5.20%, down from 5.35% at the opening and from Thursday's close of 5.20% for one-day loans. The weighted average call rate was 5.34%, up from 5.27% Thursday. The three-day call money trade volume was INR 139.87 billion, down from INR 150.93 billion Thursday at 1330 IST. During the day, the call rate moved in a wide range of 4.75-5.40%. The weighted average call rate has remained above the RBI's repo rate for almost two weeks.

 

At 1340 IST, the three-day tri-party repo was 5.15%, up from 5.10% at the opening and also higher than 5.00% at Thursday's one-day close. The three-day tri-party weighted average rate was 5.18%, up from 5.04% Thursday. The turnover in the tri-party repo market was INR 3.87 trillion, up from INR 3.71 trillion at 1330 IST Thursday. The tri-party repo rate was in the 5.00-5.28% range till noon. 

 

"The call rate is expected to cool off later in the day as there were no unexpected comments from the MPC," a dealer at a public-sector bank said. "The governor said he will maintain the (surplus) liquidity in the banking system, and this will keep the rates lower for some time."

 

"The Reserve Bank would ensure appropriate liquidity in the banking system to meet the productive requirements of the economy and facilitate monetary policy transmission," RBI Governor Sanjay Malhotra had said earlier in the day.

 

The RBI absorbed INR 1.89 trillion Thursday from the banking system, up from INR 1.71 trillion Wednesday. The absorption reflects surplus liquidity in the banking system. The liquidity grew as cash balances with the RBI fell to INR 7.90 trillion Thursday, from INR 8.01 trillion Wednesday. As per the RBI's mandate, banks need to maintain daily average cash balances of INR 7.91 trillion for the fortnight ending Jun. 15.  (Durgesh Nandan)

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India Call: Up on early demand; market expects liquidity steps from RBI Fri

 

MUMBAI – The three-day call money rate was up Friday due to early requirements for funds from primary dealerships and some banks, dealers said. The reversal of INR 288 billion Friday infused through two variable rate repo auctions, and excise duty outflows scheduled for the weekend also added to the demand for funds and kept the call rate above the Reserve Bank of India's repo rate of 5.25%. 

 

At 0930 IST, the three-day call rate was 5.40%, up from 5.20% Thursday for one-day loans. The call money rate for three-day loans opened at 5.35% Friday. The weighted average call rate was 5.40, up from 5.27% Thursday. At 0930 IST, trade volume in the call money market was INR 43.05 billion, compared with INR 66.27 billion at the same time Thursday.

 

Market participants will be closely monitoring the RBI Monetary Policy Committee's decision, as they expect the RBI to announce liquidity measures to support the banking system and to maintain the weighted average call rate below its repo rate. 

 

However, the tri-party repo rate was below the RBI's repo rate as the liquidity surplus in the banking system was near INR 2 trillion. At 0922 IST, the three-day tri-party repo rate was 5.20%, up from 5.00% Thursday for one-day loans. The weighted-average tri-party rate was 5.15%, up from 5.04% on Thursday. The volume in the tri-party repo market was INR 711.67 trillion, compared to INR 1.21 billion at 0930 IST Thursday.
 
The net liquidity absorbed by the RBI was INR 1.89 trillion Thursday, up from INR 1.71 trillion Wednesday. The absorption reflects surplus liquidity in the banking system. The liquidity grew as cash balances with the RBI fell to INR 7.90 trillion, down from INR 8.01 trillion. Banks have to maintain daily average cash balances of INR 7.91 trillion for the fortnight ending Jun. 15.

 

"Call rate is likely to fall during the day as the surplus liquidity is around 2 lakh crore (INR 2 trillion), until something unexpected comes from the MPC (Monetary Policy Committee)," a dealer at a private sector bank said. "I don't think the RBI will conduct any VRR auction today (Friday), as (surplus) liquidity and TREPs rate is quite decent," the dealer said. "But we do expect some liquidity measure from the MPC meeting."

 

Dealers expect outflows of INR 500 billion to INR 600 billion over the weekend for excise duty payments, a dealer at a state-owned bank said.  (Durgesh Nandan)

 

End

 

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

 

Edited by Saji Geroge Titus

 

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