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Informist, Tuesday, Jun. 16, 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%. There was only one trade in the last hour of the session, likely from a bank looking to meet credit disbursal, liability or cash balance needs, dealers said. Most banks needed funds Tuesday to fulfil routine demands after a likely sharp fall in surplus liquidity due to the payment of advance tax for the June quarter, they said.

 

The one-day call rate ended at 5.35%, flat against Monday's close. The weighted average call rate was 5.36%, up from 5.29% Monday. The volume in the overnight contract was INR 182.77 billion, similar to INR 183.22 billion in the previous session. The one-day tri-party repo rate ended at 5.05%, down from 5.25% Monday. However, the weighted average tri-party rate was at 5.30%, up from 5.27% Monday. The total volume in the contract was INR 4.96 trillion Tuesday, lower than INR 5.13 trillion Monday.

 

The call rate is likely to trade towards the ceiling of the Liquidity Adjustment Facility Corridor due to the major scheduled outflow for payment of goods and services tax by the end of this week and early next week amid constrained liquidity in the banking system, dealers said. The net liquidity absorbed by the RBI was INR 1.51 trillion Monday, down from INR 1.73 trillion Sunday, according to the latest release. The absorption indicates surplus liquidity in the banking system.

Most traders did not have a precise answer on why the surplus liquidity did not fall even after the outflow of advance tax, which was pegged at over INR 1 trillion. However, rates in both call and tri-party markets were higher on Monday and Tuesday and even state-owned banks were on the borrowing side, consistent with their behaviour after tax outflows, dealers said. On Tuesday, the tri-party repo rate opened at its highest level in more than two weeks and spiked to as high as 5.45% intraday.

 

"The liquidity remains similar (around INR 1.5 trillion) today (Monday's liquidity data) even after the advance tax outflow is because it is T+1 settlement transaction, so it will be reflected tomorrow (Tuesday's liquidity data)," a dealer at a private-sector bank said. "We will see the liquidity will fall around 1 lakh crore to 1.5 lakh crore (INR 1 trillion to INR 1.5 trillion) tomorrow (Wednesday)."

 

Tuesday, the central bank conducted its fifth variable rate repo auction in June. Nearly 60% of the notified INR 1.50 trillion was subscribed to, the most this month, reflecting robust demand even though the seven-day tenure was not favoured by most banks. Dealers expect the RBI to conduct more VRR auctions this week as the surplus liquidity is expected to fall even before the goods and services tax payments, which will further drain around INR 1.5 trillion from the banking system.

"If the call rate trades around 5.40-5.50% level, then (the) RBI is likely to conduct more VRR this week," a dealer at a state-owned bank said. "Also, the GST outflow is scheduled, and we don't have data for advance tax outflow yet so RBI will come up with (VRR auction)."

 

OUTLOOK

The one-day call money rate Wednesday is expected to open above the Reserve Bank of India's repo rate of 5.25% on demand for funds from primary dealerships amid tightening liquidity, dealers said. Some banks are also likely to borrow in early trade to meet their credit disbursal requirements approaching the quarter-end, they added.

 

Data for Tuesday, when released on Wednesday, may show the banking system liquidity surplus has shrunk to near-neutral after advance tax outflows, some dealers said. An outflow of INR 204.61 billion is scheduled Wednesday for the payment of the state bond auction, though it will be largely offset by scheduled coupon payments of INR 152.41 billion.

 

Dealers expect the call rate to be in the 4.70–5.50% range Wednesday. 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

5.35%--Tuesday close for one-day loans

5.40%--Tuesday open for one-day loans

5.35%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.42	5.33
3-day	--	--
14-day	5.90	5.90
1-month	6.16	6.15
3-month	6.65	6.65

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India Call: Below RBI's SDF on fall in demand post VRR

 

MUMBAI – The one-day interbank call money rate fell below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds eased after the seven-day variable rate repo auction, dealers said. The RBI took all INR 894.40 billion of bids at the INR 1.50 trillion auction at a cut-off rate of 5.26%. The auction was subscribed for over 50% of the notified amount, the highest among five VRR auctions conducted earlier this month. 

 

"In the morning, rates in both the call and TREPs (tri-party repo) markets were elevated, which resulted in more than 50% subscription in the auction." a dealer at a public sector bank said. "The auction was not fully subscribed as it was a longer-term VRR (seven-day), making participants somewhat reluctant and there was also an expectation that overnight rates would soften." 

 

At 1430 IST, the one-day call rate was 4.60%, sharply lower than 5.40% at the opening and also below 5.35% at Monday. The weighted average call rate was 5.38%, up from 5.31% Monday. The trade volume was INR 167.25 billion, up from INR 147.25 billion Monday. For the rest of the day, the call money rate is seen in the range of 4.20–5.45%, dealers said.

 

Some public sector banks were borrowing after advance tax outflows, while demand for funds also increased as banks approached the end of the June quarter, dealers said. Typically, credit offtake increases near the end of a financial quarter as banks want to maximise loan growth metrics. 

 

"Borrowing activity from public sector banks picked up after advance tax-related outflows (Monday), while funding needs also rose due to quarter-end positioning," a dealer at a private sector bank said. Advance tax payments worth over INR 1 trillion likely took place Monday, dealers said. 

 

The net liquidity absorbed by the RBI was INR 1.51 trillion Monday, down from INR 1.73 trillion Sunday, showing a slight reduction in the liquidity surplus in the banking system. Traders said that the demand for funds was driven by tax outflows, but were unsure why it had not reflected in the liquidity data. Some dealers said the outflows may be better reflected in Tuesday's data, with some advance tax payments likely to have taken place then. 

 

At 1435 IST, the one-day tri-party rate was 5.26%, lower than 5.30% at the opening but marginally up from Monday. The weighted average tri-party rate was 5.30%, up from 5.26% at the same time Monday. For the rest of the day, the tri-party repo rate is expected to be in the range of 5.26–5.40%, dealers said.  (Shumaila Firoz) 

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India Call: Up on demand; liquidity does not reflect advance tax outflow 

 

MUMBAI – The one-day interbank call money rate rose slightly Tuesday, despite adequate liquidity in the banking system, dealers said. Firm demand from primary dealerships and some banks for credit disbursements kept the call rate above the Reserve Bank of India's repo rate of 5.25%, they said.                

 

At 0940 IST, the one-day call rate was 5.43%, up from 5.35% Monday. The weighted average call rate was 5.43%, also up from 5.29% Monday. The call money market turnover was at INR 42.81 billion, higher than INR 10.40 billion Monday at 0930 IST.

 

At 0940 IST, the one-day tri-party repo rate was 5.26%, slightly up from 5.25% Monday. The weighted average rate was at 5.27%, flat from Monday. The volume in the tri-party repo market was INR 1.15 trillion, up from INR 960.10 billion Monday at 0930 IST.

 

The RBI conducted the fifth variable rate repo auction of this month Tuesday for seven days for INR 1.50 trillion. Subscription at the auction is seen at INR 600 billion, with a cut-off of 5.26%, as per the median in an Informist poll of 16 market participants. Dealers expect the bids at the auction to be between INR 200 billion and INR 1.35 trillion.

 

The VRR auction was in line with the market expectations as overnight market rates were trading at the higher end of the Liquidity Adjustment Facility corridor due to demand for funds after advance payment for income tax and corporation tax. "The market had expected a VRR (auction) today (Tuesday) as the overnight rate was on the higher side (of Liquidity Adjustment Facility corridor)," a dealer at a public sector bank said. 

 

The net liquidity absorbed by the RBI was INR 1.51 trillion Monday, down from INR 1.73 trillion Sunday, according to the latest release. The absorption indicates surplus liquidity in the banking system. "Market participants were expecting liquidity to decline because of advance tax payments, but surprisingly, it has not fallen," a dealer at another public-sector bank said. "We are still figuring out why the liquidity has not fallen. Maybe we can see the impact in tomorrow (Tuesday's) liquidity data."

 

During the day, the call rate is expected to be at 4.80-5.50% as demand is likely to fall later during the day. 

 

End 

 

US$1 = INR 94.56

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

 

Edited by Deepshikha Bhardwaj

 

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