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Informist, Tuesday, Jun. 9, 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 Tuesday as demand for funds from primary dealerships and banks limited a fall in the rate to the lower end of the Liquidity Adjustment Facility corridor, dealers said. Some banks borrowed funds to meet cash requirements due to the quarter-end in advance.   

 

The one-day call rate ended at 5.27% Tuesday, up from 5.25% Monday. The weighted average call rate was 5.27%, slightly lower than 5.30% Monday. The call money market traded volume was INR 184.86 billion, up from INR 172.08 billion in the previous session. The weighted average call rate remained above repo rate as the majority of the volumes traded during the first half of the day, when the rate was higher, which set the tone for the rest of the day, a dealer at a state-owned bank said.    

The one-day tri-party repo rate for one-day funds ended at 5.25%, up from 5.00% Monday. However, the weighted average rate in the tri-party repo market fell to 5.18% from 5.20% Monday. The tri-party repo market's total volume was INR 5.20 trillion Tuesday, slightly higher than INR 5.19 trillion Monday. The tri-party repo rate jumped at the last minute before closing. Most banks borrowed funds from the tri-party repo market to fulfil credit disbursal demands, dealers said. 

 

"The TREPs rate (tri-party repo rate) rose during the last minute as banks were waiting for the rates to fall by the end (market hours) but it rose as borrowing increased at the last minute," a dealer at another state-owned bank said. "Those banks that had to maintain daily balances were borrowing at a higher rate and they (banks who borrowed) preferred TREPs (tri-party repo market) over the call (market) as it was an unsecured market (call money market)."

 

The net liquidity absorbed by the RBI--an indication of surplus liquidity--was INR 1.34 trillion Monday, down from INR 1.66 trillion Sunday, according to the latest data. The outflow of INR 340 billion for payments for the weekly gilt auction led to a decline in the surplus liquidity, dealers said. The weekly gilt auction was conducted Friday and settlement for the same was scheduled for Monday. 

 

"...we expect the (surplus) liquidity to increase in near future, due to the FCNR news (foreign currency non-resident deposits)," a dealer at another state-owned bank said. "But it will also depend on what interest rate banks fix on the deposits."

 

The spread between the weighted average call rate and the weighted average tri-party repo rate was 9 basis points, similar to 10 bps at Monday's close, reflecting firm demand for funds in both markets. Dealers will monitor the surplus liquidity in the banking system for the rest of the week, as outflow for advance tax is scheduled for next week, they said.

 

OUTLOOK

The one-day interbank call money rate on Wednesday is likely to open above the RBI's repo rate of 5.25%, due to initial demand from primary dealerships and some banks early trade, dealers said. Dealers expect the call rate to be in the 4.70–5.40% 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 remain between INR 1.20 trillion and INR 1.30 trillion due to lack of major scheduled outflow or inflows for this week. 

 

CALL RATE

5.27%--Tuesday close for one-day loans

5.35%--Tuesday open for one-day loans

5.25%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.33	5.38
3-day	--	--
14-day	5.87	5.88
1-month	6.11	6.12
3-month	6.72	6.76

 

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India Call: Falls below SDF as early demand eases; weighted avg stays firm

 

MUMBAI – The one-day interbank call money rate slipped below the Reserve Bank of India's Standing Deposit Facility of 5.00% Tuesday as demand for funds eased after primary dealerships and some banks met their early cash requirements, dealers said. However, the weighted average call rate was above the RBI's repo rate of 5.25% due to persistent funding needs from some banks, they said. 

 

At 1430 IST, the one-day call rate was 4.60%, sharply down from 5.35% at the opening, also down from Monday's close of 5.25%. The weighted average call rate was 5.30%, unchanged from Monday. The trade volume was INR 156.79 billion, up from INR 164.16 billion the same time Monday. During the day, the call rate moved in a wide range of 4.60–5.40%.

 

Deposit growth lagging credit growth has been a key driver of higher weighted average rates in the overnight market. "Weighted average call rates have been elevated in the past few weeks because deposit growth is lagging credit growth, forcing banks to borrow more from the (call) market," a dealer at a public-sector bank said.

 

The seasonal factors have also increased funding requirements as banks borrowed funds to meet credit disbursal requirements as it is the last month of the June quarter. "Funding demand has risen due to quarter-end requirements in June, along with ongoing credit offtake," the dealer said. Banks are also borrowing to meet maturing obligations, which has added to the pressure on rates. "Banks are also borrowing due to (CD) certificate of deposit redemptions," the dealer quoted above said. 

 

At 1430 IST, the one-day tri-party repo was 5.18%, unchanged from opening and up from Monday's close of 5.00%. The weighted average rate was 5.19%, down from 5.20% Monday. The volume in the tri-party repo market was INR 4.55 trillion, up from INR 4.45 trillion at the same time Monday. 

 

The net liquidity absorbed by the RBI, a proxy for surplus liquidity in the banking system, was INR 1.34 trillion Monday, down from INR 1.66 trillion Sunday, according to the latest release. The surplus liquidity fell mainly due to INR 340 billion in outflows for payment for the weekly gilt auction conducted Friday, and tax-related outflows, dealers said. 

 

Dealers said liquidity conditions could tighten further in the coming sessions due to advance tax outflows and the reporting fortnight ending Jun. 15, but the RBI is expected to step in with further variable rate repo operations, they said. 

 

"RBI may conduct variable rate repo auctions of around INR 1.0 trillion to INR 1.5 trillion this week for three day tenure," a dealer at a private sector bank said.

 

Dealers said that the central bank is expected to maintain liquidity in line with its policy stance. "RBI has indicated that it will provide appropriate liquidity to meet the productive needs of the economy, which means liquidity is unlikely to be in (excess) surplus or deficit," the dealer said. (Shumaila Firoz) 

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India Call: Above repo on borrowings from primary dealerships

 

MUMBAI – The one-day interbank call money rate rose above the Reserve Bank of India's repo rate of 5.25% Tuesday on demand for funds from primary dealerships, dealers said. Dealers expect the call rate to fall during the day once the early demand for funds eases. The tri-party repo rate was below the RBI's repo rate due to surplus liquidity in the banking system, dealers said.  

 

At 0933 IST, the one-day call rate was at 5.35%, up from 5.25% at close on Monday. The weighted average call rate was at 5.35%, up from 5.30% Monday. The call-money market's turnover was at INR 5.70 billion, lower than INR 47.72 billion at 0930 IST Monday. 

 

At 0930 IST, the one-day tri-party repo rate was 5.19%, up from 5.00% Monday. The weighted average rate fell marginally to 5.18%, from 5.20% Monday. The volume in the tri-party repo market was INR 1.29 trillion, down from INR 1.55 trillion Monday.

The spread between the overnight call rate and the tri-party repo rate was 17 basis points at the open, down from 25 basis points at Monday's close, reflecting firm demand for funds in both markets in early trade. 

 

The net liquidity absorbed by the RBI, a proxy for surplus liquidity in the banking system, was INR 1.34 trillion Monday, down from INR 1.66 trillion Sunday, according to the latest release. The surplus liquidity fell mainly due to INR 340 billion in outflows for payments from the weekly gilt auction, dealers said.
 

"(Surplus) liquidity is not likely to fall below 1 lakh crore (INR 1 trillion) this week as there is no major inflow or outflow schedule this week," a dealer at a small finance bank said.

 

During the day, the call rate is expected to be around 4.80-5.40%, as demand is usually high during the first half of the day and is likely to fall after primary dealers' borrowing needs are met, dealers said. Market participants are now looking forward to the RBI's next liquidity operation this week, as the weighted average call rate has remained above the repo rate for the past few weeks. (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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