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Informist, Monday, Jun. 15, 2026

By Aaryan Khanna

NEW DELHI – The one-day interbank call money rate ended above the Reserve Bank of India's repo rate of 5.25% Monday as banks' demand for funds increased due to outflows for advance tax payments, dealers said. The end of the reporting fortnight also played a part in driving up demand for funds, particularly in the tri-party repo market, they said.

Outflows of advance tax, totalling over INR 1 trillion, put pressure on money market rates. The rates in the call money market had cooled in the afternoon but picked up near the close after the tri-party repo market shut at 1600 IST, dealers said. 

The one-day call rate ended at 5.35%, up from 5.20% on Friday for three-day loans. The weighted average call rate was 5.29%, slightly up from 5.27% Friday. The volume in the overnight contract rose to INR 183.22 billion Monday from INR 149.67 billion in the previous session.

The one-day tri-party repo rate ended at 5.25%, up from 5.05% for three-day loans Friday. The weighted average tri-party rate rose to 5.27% from 5.14% Friday. The total volume in the contract was INR 5.13 trillion Monday, up from INR 4.90 trillion for three-day loans Friday.

As of Sunday, banks' average daily cash balances for the reporting fortnight ending Monday were above the regulatory requirement, though they likely increased the amount parked with the RBI on Monday. Banks have maintained an average cash balance of INR 7.94 trillion as of Sunday, since the beginning of the reporting fortnight, against the regulatory requirement of INR 7.91 trillion. However, the cash balance was only INR 7.63 trillion Sunday.

"It is not obvious in call, but these things show up in TREPS (tri-party) repo almost immediately," a dealer at a private-sector bank said. "Even nats (public-sector banks) were borrowing because they had the most buildup of advance tax, so funding conditions were tricky at least from an overnight standpoint after the VRR (variable rate repo auction)."

The RBI conducted an overnight variable rate repo auction of INR 750 billion at 0930-1000 IST and accepted all bids totalling INR 282.20 billion. Demand at the auction was poor as market participants found borrowing in the tri-party repo market cheaper at the time, dealers said. This eventually led to the tri-party rate remaining above the call rate for much of the day, they said.

However, the central bank is likely to conduct further VRR auctions as liquidity comes under strain due to advance tax payments, with the liquidity surplus in the banking system likely to be erased this week, dealers said. The net liquidity absorbed by the RBI--an indicator of surplus liquidity--was INR 1.73 trillion Sunday, similar to INR 1.74 trillion Saturday, but slightly up from INR 1.66 trillion Friday, according to the latest release. In addition to the advance tax outflows, Monday's data will also show the impact of an INR 320-billion payment due to the settlement of Friday's government bond auction, dealers said.

OUTLOOK

The one-day call money rate is expected to open higher than the policy repo rate of 5.25% on Tuesday due to an early demand for funds from primary dealerships amid tight liquidity, dealers said. Advance tax payments may continue Tuesday, though the majority took place Monday, they said.

The RBI's seven-day, INR 1.50 trillion variable rate repo auction at 0930-1030 IST Tuesday may help keep the call money rate below the Marginal Standing Facility rate of 5.50%. However, traders have mixed views on subscriptions at the auction, with banks not preferring to borrow funds for seven days. At the same time, systemic liquidity is expected to remain tight due to the advance tax payments and the goods and services tax payments next week. 

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% band. 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

5.35%--Monday close for one-day loans

5.35%--Monday open for one-day loans

5.20%--Friday close for three-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: At RBI's repo, TREPS jumps above amid advance tax outflow

MUMBAI – The one-day interbank call money rate fell slightly below its opening level but remained elevated at the Reserve Bank of India's repo rate of 5.25% on the back of ongoing advance tax outflows and funding requirements to maintain sufficient cash balances on the last day of the reporting fortnight, dealers said. Till early afternoon, a large portion of the day's volumes had already been traded in both the call and tri-party repo market, largely driven by borrowing from both public and private sector banks in the morning hours amid ongoing advance tax outflow, they said. 

The RBI conducted an overnight variable rate repo auction of INR 750 billion earlier in the day and accepted all bids. The bids amounted to just INR 282.20 billion. Demand at the auction was poor as market participants found borrowing in the tri-party repo market cheaper at the time, with the cut-off rate at the auction required to be above repo and the tri-party repo rate trading below the RBI's repo rate in a range of 5.22-5.26%, dealers said. Even as the call and TREPS rates are trading at or above the repo rate, the RBI is unlikely to conduct another VRR auction Monday. This is primarily because the morning auction saw weak subscription, and hence reduces the likelihood of a second VRR, dealers said. 

At 1330 IST, the one-day call rate was 5.25%, lower than 5.35% at the opening but above 5.20% at Friday's close for three-day loans. The weighted average call rate was 5.33%, up from 5.27% Friday. The trade volume was INR 135.31 billion, up from INR 124.60 billion at 1330 IST Friday.

The net liquidity absorbed by the RBI--an indication of surplus liquidity--was INR 1.73 trillion Sunday, similar to INR 1.74 trillion Saturday, but slightly up from INR 1.66 trillion Friday, according to the latest release. The absorption is an indication of surplus liquidity in the banking system. Surplus liquidity likely rose due to coupon payments on gilts and state bonds totalling INR 165.96 billion between Friday and Sunday. 

Following the VRR auction result, the tri-party repo rate shot up to 5.40%, as market participants initially expected rates to remain below the repo rate. There were fewer lenders and more borrowers, which led to an upward movement in rates, dealers said. Demand for loan disbursements also pushed up the overnight borrowing rates, dealers said.

At 1330 IST, the one-day tri-party rate was 5.38%, sharply higher than 5.18% at the opening and 5.05% on Friday for three-day loans. The weighted average tri-party rate was 5.25%, up from 5.16% at the same time Friday. The trade volume was INR 3.90 trillion, up from INR 3.69 trillion at 1330 IST Friday. Additionally, Monday is marked by advance tax outflows as well as the the last day of the reporting fortnight, both of which are contributing to the upward pressure on rates, they said. 

Some dealers expect that advance tax outflows to happen in two tranches. "If large tranches of outflows occur today (Monday), then rates might even cross the MSF (Marginal Standing Facility) rate," a dealer at a public sector bank said. While market participants do not yet have a clear estimate of the day's outflows, the total liquidity drain Monday is expected to be around INR 1.5 trillion.  (Shumaila Firoz) 

India Call: Up on demand from banks amid tax outflows, reporting fortnight 

MUMBAI – The interbank call money rate for one-day loans opened above the Reserve Bank of India's repo rate of 5.25% due to heavy demand for funds and large outflows expected on account of advance payment of income tax and corporation tax, dealers said. However, rates are expected to cool later in the day as the RBI conducted a one-day variable rate repo auction to infuse INR 750 billion into the banking system between 0930 IST and 1000 IST. 

"Banks were borrowing as advance tax outflows and reporting fortnight (requirements) are scheduled today (Monday), demand for funds remained elevated," a dealer at a private sector bank said. Outflow of around INR 1.5 trillion for advance tax payment is expected to take place Monday. The outflow is likely to drain surplus liquidity, and dealers expect the liquidity to turn into a deficit due to the outflow. 

The RBI conducted an overnight VRR auction for INR 750 billion Monday. Subscription at the auction is seen at INR 412.50 billion, with a cut-off of 5.26%, as per the median in an Informist poll of 12 market participants. Dealers expect the bids at the auction to be between INR 200 billion and INR 750 billion. 

At 0952 IST, the one-day call rate was 5.35%, up from 5.20% Friday for three-day loans. The weighted average call rate was 5.35%, also higher than 5.27% Friday. The call money market turnover was at INR 18.69 billion, sharply lower than INR 46.54 billion at 0930 IST Friday. At the same time, the one-day tri-party repo rate was 5.24%, up from 5.05% Friday for three-day funds. The weighted average rate was at 5.23%, up from 5.14% Friday. The volume in the tri-party repo market was INR 2.32 trillion, up from INR 1.36 trillion at 0930 IST Friday.

The net liquidity absorbed by the RBI was INR 1.66 trillion Friday, slightly higher than INR 1.59 trillion Thursday, according to the latest release. The absorption is an indication of surplus liquidity in the banking system.  

During the day, the call rate is expected to be around 4.80-5.50% as demand is likely to fall later if the VRR auction gets good subscription. "With no major inflows expected, the VRR auction is likely to see above 50% subscription this time," a dealer at a public sector bank said.  (Shumaila Firoz) 

End

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

Edited by Saji George Titus

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