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Informist, Friday, Jun. 12, 2026

 

By Durgesh Nandan

 

MUMBAI – The three-day interbank call money rate ended below the Reserve Bank of India's repo rate of 5.25% Friday. The weighted average call rate remained above the repo rate on three-day funding requirements and to maintain cash reserve ratio, they added. As it is the last month of the reporting quarter, most banks also borrowed funds to fulfil credit disbursement needs.

 

The three-day call rate ended at 5.20%, the same as Thursday's close for one-day loans. The weighted average call rate was 5.27%, the same as Thursday. The trade volume in the call money market was INR 149.67 billion, down from INR 169.82 billion in the previous session. The three-day tri-party repo rate ended at 5.05%, up from 4.75% for one-day loans Thursday. The weighted average tri-party rate was 5.14%, marginally up from 5.13% Thursday. The total volume in the tri-party repo market was INR 4.90 trillion Friday, down from INR 5.15 trillion Thursday.

 

The net liquidity absorbed by the RBI was INR 1.59 trillion Thursday, slightly up from INR 1.46 trillion Wednesday, according to the latest data. The absorption indicates surplus liquidity in the banking system. Dealers expect the surplus liquidity to turn into a deficit by Monday as outflow of around INR 1.5 trillion is scheduled for advance tax payments.

 

Cash balances with the RBI were largely steady at INR 7.62 trillion Thursday against INR 7.68 trillion Wednesday. Banks have maintained an average cash balance of INR 8.02 trillion until Thursday since the beginning of the reporting fortnight, against the regulatory requirement of INR 7.91 trillion. The excess will reduce the demand from banks to meet cash reserve ratio needs before the fortnight ends on Monday, with Thursday's cash balances with the RBI only INR 7.62 trillion.

 

Most of the dealers had expected the RBI to conduct a variable rate repo auction Friday, but, contrary to the market's expectation, it did not. "If the call rate had traded near 5.45–5.50%, then they (the RBI) would have conducted the VRR (auction)," a dealer at a state-owned bank said. "...and today (Thursday's liquidity data) liquidity was also sufficient so banks were not in rush for funds." 

 

Dealers had expected the RBI to conduct a short-term variable rate repo auction for INR 1 trillion to INR 1.5 trillion on Monday. They said any VRR auction less than a seven-day tenure will get a good subscription from banks. Post-market hours, the RBI announced an overnight VRR for INR 750 billion Monday. The spread between the weighted average call rate and the weighted average tri-party repo rate was 13 basis points, similar to Thursday.

 

OUTLOOK

The one-day interbank call money rate on Monday is expected to open above the RBI's repo rate of 5.25% on demand for funds from primary dealerships and some banks in early trade, dealers said. Outflow of INR 1 trillion to INR 1.5 trillion for advance tax payments is scheduled for Monday, which is expected to take systemic liquidity to a deficit, dealers said. This would be a liquidity deficit for the first time since Mar. 22.

 

Dealers expect the call rate to be in the 4.70–5.45% 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. 

 

CALL RATE

5.20%--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	5.33	5.33
3-day	--	--
14-day	5.88	5.88
1-month	6.15	6.14
3-month	6.65	6.67

 

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India Call: Slips below RBI's SDF rate as demand for funds subsides

 

MUMBAI – The three-day interbank call money rate eased during the day and slipped below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds from primary dealerships and some banks subsided after they met their funding requirements in the first half, dealers said. Some banks had additional funding needs because of the three-day borrowing for the weekend, advance tax outflows, and the end of the reporting fortnight Monday, they said. 

 

At 1615 IST, the three-day call rate was at 4.75%, sharply down from 5.35% at opening and 5.20% on Thursday. The weighted average call rate was 5.29%, up from 5.27% Thursday. The volume was INR 141.80 billion, down from INR 156.34 billion Thursday at 1530 IST. The three-day tri-party repo rate ended at 5.05%, up from 4.75% Thursday. The weighted-average tri-party rate was 5.14%, marginally up from Thursday. The total volume in the tri-party repo market was INR 4.90 trillion Friday, down from INR 5.15 trillion Thursday.

 

"(Weighted average) call money rates have remained firm in recent weeks as credit growth continues to outpace deposit growth, prompting banks to increasingly rely on and borrow more from the call market," a dealer at a public-sector bank said. "Banks also borrowed funds to meet credit disbursal requirements, as it is the last month of the Apr-Jun quarter."

 

According to data released by the RBI Thursday, bank credit grew 17.7% year-on-year to INR 215.16 trillion as of May 31, while deposits rose 12.2% to INR 260.02 trillion. Consequently, the credit-to-deposit ratio edged up to 82.7% from 82.5?ortnight earlier, reflecting stronger loan growth relative to deposits. 

 

Some banks said inflows through their foreign-currency non-resident deposit schemes have already begun, while others said they are not aware of any such inflows. Several banks have sharply increased their FCNR(B) deposit rates in the three- to five-year tenure to attract dollar deposits from non-resident Indians and Overseas Citizens of India. This comes after the central bank announced a facility to cover the full hedging costs for banks raising fresh three- to five-year FCNR(B) deposits till Sept. 30.

 

Even with these inflows lined up, dealers expect the central bank to conduct a variable rate repo auction on Monday, likely in the range of INR 1 trillion to INR 1.5 trillion with a three-day tenure. These expectations stem from upcoming advance tax outflows and the reporting fortnight ending Monday. Dealers estimate advance tax outflows of around INR 1.5 trillion to INR 1.8 trillion. "VRR auction may see subscription levels of over 50%, because of the advance tax outflows," a dealer at a private-sector bank said.

 

On Monday, market participants expect slight pressure on money market rates as the liquidity surplus in the banking system is expected to decline following advance tax outflows, dealers said. In the absence of a variable rate repo auction by the RBI, the call money rate on Monday could move closer to the RBI's Marginal Standing Facility rate of 5.50%, they said. "If the RBI does not conduct a VRR auction, call rates may inch up towards the MSF rate amid tighter liquidity conditions," the dealer at the public-sector bank said.

 

Over the past months, trading volume has increased in the tri-party repo market. "Mutual funds have ample cash and are actively lending in the tri-party repo market, as we have seen an increase in volume in this uncertainty (war) also," the dealer said.  (Shumaila Firoz) 

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India Call: Up despite comfortable liquidity surplus on lack of VRR 

 

MUMBAI – The three-day interbank call money rate was up Friday due to firm demand from primary dealerships and some banks, dealers said. The three-day borrowings and absence of variable rate repo auction Friday also supported the rise in call rate above the Reserve Bank of India's repo rate of 5.25%, dealers said. They expect the call rate to remain above the repo rate if the RBI does not conduct a VRR auction Friday on the back of scheduled outflows for advance tax payments for corporate tax and income tax Monday. 

At 0945 IST, the three-day call money rate was 5.35%, higher than 5.20% Thursday for one-day loans. The weighted average call rate was 5.35%, also higher from 5.27% Thursday. The call money market trade volume was INR 68.08 billion, up from INR 40.33 billion at 0930 IST Thursday. 

 

The three-day tri-party repo rate was 5.19%, up from 4.75% Thursday for one-day funds. The weighted average rate was 5.18%, slightly higher from 5.13% Thursday. The turnover in the tri-party repo market was INR 1.68 trillion, compared with INR 1.47 trillion at 0930 IST Thursday.

 

"Unless the RBI announces a VRR (auction) today (Friday), call (rate) will remain above repo," a dealer at a private sector bank said. "It can move higher if demand picks up in the second half as major outflows (outflow for advance tax) are scheduled on Monday."

 

Most dealers expect the RBI will conduct a three-day variable rate repo auction Friday for INR 1.00 trillion to INR 1.50 trillion. Monday, outflows of INR 1.5 trillion to INR 1.8 trillion for advance tax payments for income tax and corporation tax are scheduled, dealers said. Banks also need cash for three-day borrowings to meet the credit-related demands for the quarter-end month, they said.

 

While it is the end of the reporting fortnight Monday, dealers do not expect much borrowing for this as most banks have maintained surplus cash balances with the RBI during the initial days of the month. However, there would be demand for funds from some banks to maintain the average requirement for cash reserve ratio until Monday.

 

"Advance tax is the biggest reason for banks' demand (for funds) today (Friday) and quarter-end requirements are also there," a dealer at a small finance bank said. "Banks are not looking to maintain average CRR (cash reserve ratio) requirement as they have maintained surplus in early days."

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 1.59 trillion Thursday, up from INR 1.46 trillion Wednesday, according to the latest data. Dealers were expecting the surplus liquidity to fall due to major outflow of INR 426 billion for the payment of Treasury bills Thursday. Cash balances fell to INR 7.62 trillion Thursday, from INR 7.68 trillion Wednesday. Banks need to maintain an average amount of INR 7.91 trillion till Monday with the RBI.

 

"Surplus liquidity rose due to the rise in SDF (Standing Deposit Facility) if we compare it to the previous day (Wednesday)," the dealer at the small finance bank said. "Banks may have borrowed surplus at 4.70-4.80% and then kept it in the SDF (with the RBI)."  (Durgesh Nandan) 

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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