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Informist, Monday, Jun. 8, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate ended at the Reserve Bank of India's repo rate of 5.25% Monday due to demand for funds from some banks and primary dealerships, dealers said. Banks mainly borrowed funds to meet credit disbursal requirements as it is the last month of the June quarter, they said.

 

The one-day call rate ended at 5.25% Monday, up sharply from 4.70% on Saturday for two-day loans. The weighted average call rate was 5.30%, also higher than 4.88% Saturday. The traded volume in the call money market was INR 172.08 billion, up significantly from INR 10.50 billion in the previous session. Primary dealerships and small banks were the major borrowers Monday in the call money market, whereas most banks borrowed funds in the tri-party repo market mainly to meet credit disbursal requirements, dealers said.

The one-day tri-party repo rate for one-day funds ended at 5.00%, marginally down from 5.07% Saturday for two-day funds. The weighted average rate in the tri-party repo market was 5.20%, also up from 5.05% Saturday. The tri-party repo market's total volume was INR 5.19 trillion Monday, up from INR 201.94 billion Saturday. On Saturday, the rates and volumes were sharply low in both the call and tri-party repo markets due to sluggish demand for funds, dealers said. Usually, most market participants meet their cash needs on Friday. 

 

"Our bank was borrowing to meet the new ECLGS 5.0 (Emergency Credit Line Guarantee Scheme) requirements in TREPs (tri-party repo market)," a dealer at the state-owned bank said. As of Jun. 1, the government has issued credit guarantees for over 26,000 accounts, totalling INR 157 billion under this newly-launched scheme.

The net liquidity absorption was INR 1.66 trillion Sunday, up from INR 1.59 trillion Saturday, but down from INR 1.86 trillion Friday, according to the latest data released by the RBI. Advance tax outflows are scheduled at the end of the reporting fortnight, dealers said. The tax outflow is likely to push the call rate towards the higher side of the Liquidity Adjustement Facility corridor, dealers said. 

 

On Monday, the central bank conducted the third variable rate repo auction for the month. The RBI conducted a four-day VRR auction of INR 750 billion. The auction was poorly subscribed as the tri-party repo rate traded in a narrow band of 5.20–5.22%, lower than the cut-off rate of 5.26% during the auction hour, dealers said. The RBI accepted all bids of INR 236.80 billion at the auction.

 

Dealers had mixed views on whether the RBI would conduct more VRR auctions this week or not. Most said it is likely to roll over Monday's auction on Friday for a three-day operation, for a size of INR 1 trillion.

 

"They (RBI) are conducting VRR (auctions) not only to control the rates, but also to offset the impact of the dollars they are selling in the market," a dealer at another state-owned bank said. "To protect the fall in rupee, the RBI is continuously selling dollars and this is leading to rupee deficit and that's why they are coming up so many VRRs (auctions) as they are also looking at the overnight market rates, so we can expect more VRR (auctions) this week." However, the RBI is seen refraining from infusing durable liquidity as foreign inflows to the tune of at least $40 billion are expected after the barrage of measures to shore up capital the central bank and the government announced Friday.

 

OUTLOOK

The one-day interbank call money rate on Tuesday is likely to open above the RBI's repo rate of 5.25%, owing to likely demand for funds at the beginning of trade from primary dealerships and some banks, dealers said. Dealers expect the call rate to be in the 4.60–5.40% range. The tri-party repo rate is expected to trade in a 4.90–5.30?nd. The weighted average call rate is expected to be around 5.25–5.30%, and the weighted average rate in the tri-party repo market is likely to be around 5.15-5.20%, they said. The surplus liquidity is expected to be at INR 1.40 trillion to INR 1.60 trillion for the rest of the week, dealers said. 

 

CALL RATE

5.25%--Monday close for one-day loans

5.40%--Monday open for one-day loans

4.70%--Saturday close for two-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.38	5.36
3-day	--	--
14-day	5.88	5.90
1-month	6.12	6.12
3-month	6.76	6.80

 

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India Call: Slips below RBI'S SDF rate; tax outflows keep weighted avg high

 

MUMBAI – The one-day interbank call money rate slipped below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Monday as demand for funds eased after primary dealerships met their early cash requirements, dealers said. However, the weighted average call rate was above the repo rate due to persistent funding needs amid ongoing tax-related outflows, they said. 

 

At 1430 IST, the one-day call rate was 4.95%, down from 5.40% at the opening, but up from Saturday's close of 4.70% for two-day loans. The weighted average call rate was 5.33%, sharply up from 4.88% Saturday. The trade volume was INR 152.73 billion, sharply up from INR 871.5 million Saturday. During the day, the call rate moved in a wide range of 4.75–5.40%. 

 

The weighted average call rate on weekdays has remained above the RBI's repo rate since May 21. Dealers said the weighted average call rate has remained firm over the past few sessions due to low liquidity surplus in the banking system. The rate was elevated Monday as well, with tax outflows adding to the pressure. Though excise duty outflows were completed over the weekend, some traders said payments for tax deducted at source may drain up to INR 400 billion on liquidity from the banking system Monday. 

 

The net liquidity absorbed by the RBI--an indication of surplus liquidity--was INR 1.66 trillion Sunday, up from INR 1.59 trillion Saturday, but down from 1.86 trillion Friday, according to the latest release. Surplus liquidity fell due to outflows for the payment of excise duty over the weekend, dealers said.

 

The RBI conducted a four-day variable rate repo auction worth INR 750 billion, but the response was weak, with only INR 236.80 billion of bids accepted. Banks largely turned to the tri-party repo market for funding, as the tri-party rate was relatively low, reducing demand for the RBI's tool at the higher 5.26% minimum cut-off rate, dealers said.

 

At 1430 IST, the one-day tri-party repo was 5.05%, down from 5.18% at open and also lower than 5.07% at Saturday's close for two-day loan. The weighted average rate was 5.19%, higher than 5.05% Saturday. The volume in the tri-party repo market was INR 4.44 trillion, sharply up from INR 114.46 million Saturday. 

 

Mutual funds have ample cash and are actively lending in the tri-party repo market because of the uncertainty in the equity market, reflected in higher trading volumes over the past month. "TREPS (tri-party repo market) volumes have increased significantly, earlier it used to close around INR 4.5 trillion, now it is closer to INR 5.5 trillion. Mutual funds are actively deploying funds there," a dealer at a public sector bank said. 

 

Market participants said the RBI has been conducting VRR auctions so frequently to prevent overnight rates from breaching the Marginal Standing Facility rate of 5.50%. "VRR is essentially a signal from the RBI to cap rates. Whenever rates are expected to cross MSF, the central bank steps in with liquidity infusion," the dealer said. 

 

Dealers expect the RBI to roll over Monday's VRR auction when it matures Friday with an even higher amount due to scheduled tax outflows next week. Advance tax payments due around Jun. 15 are scheduled to further drain banking system liquidity.  (Shumaila Firoz) 

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India Call: Up, above repo due to early demand from PDs post excise outflow

 

MUMBAI – Funding demand from primary dealerships and a few banks raised the one-day interbank call money rate Monday, dealers said. As a result, the overnight rate was above the Reserve Bank of India's 5.25% repo rate despite a liquidity surplus in the banking system, they said.

 

At 0930 IST, the one-day call rate was 5.40%, sharply up from 4.70% Saturday for two-day loans. The weighted average call rate was 5.39%, also up from 4.88% Saturday. The call-money market turnover was at INR 47.72 billion, sharply higher than INR 100 million at 1030 IST Saturday. During the day, the call rate is seen to be around 4.80-5.40% as demand is highest early in the session and rates are likely to fall after primary dealers' borrowing needs are met.

 

RBI Governor Sanjay Malhotra said Friday the central bank would ensure adequate liquidity in the banking system to meet the productive needs of the economy. Following the comment, the RBI held the third variable rate repo auction for the month on Monday. It conducted a four-day, VRR auction for INR 750 billion from 0930 IST to 1000 IST. The subscription at the auction is seen at INR 212.50 billion, with a cut-off of 5.26%, as per the median of the Informist poll of 10 banks. Dealers expect the bids at the auction to be between INR 100 billion and INR 250 billion. The previous two auctions were under-subscribed. Banks took only INR 288.05 billion out of the total notified amount of INR 1.25 trillion from both the auctions.

 

"The VRR (auction) will not see much subscription because the TREPs (tri-party) rate is lower (than the minimum cut-off of 5.26%) currently (0930 IST)," a dealer at a small finance bank said. 

 

At 0930 IST, the one-day tri-party repo rate was 5.20%, up from 5.07% Saturday's closing level for two-day funds. The weighted average rate rose to 5.21% from 5.05% Saturday. The volume in the tri-party repo market was INR 1.55 trillion, significantly up from INR 520 million Saturday. The rates and volumes in both call money and tri-party repo markets Saturday were low due to limited participation over the weekend, as is the usual case.

 

The net liquidity absorbed by the RBI was INR 1.85 trillion Friday, down from INR 1.89 trillion Thursday, according to the latest release. The absorption is an indication of surplus liquidity in the banking system. Surplus liquidity is expected to fall due to an outflow of INR 500 billion to 700 billion over the weekend for the payment of excise duty, dealers said. Another INR 340 billion payment for the settlement of the weekly gilt auction conducted Friday is scheduled to drain liquidity Monday.

 

"After the excise duty (outflow), surplus liquidity will be around INR 1.20 trillion and that's the reason (the) RBI had conducted a VRR (auction) today (Monday)," a dealer at a state-owned bank said. (Durgesg Nandan) 

 

End

 

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

 

Edited by Avishek Dutta

 

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