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Informist, Wednesday, Jun. 17, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate Wednesday ended slightly above the Reserve Bank of India's repo rate of 5.25% on funding requirements from market participants after the tri-party repo market shut at 1600 IST, dealers said. Banks mainly borrowed to meet credit disbursal requirements at quarter-end amid constrained liquidity, they said. The call rate usually rises after the tri-party repo market closes, as fewer lenders are available.

 

The one-day call rate ended at 5.30%, slightly down from Tuesday's close of 5.35%. The weighted average call rate was 5.35%, marginally down from 5.36% Tuesday. The volume in the overnight contract was INR 208.40 billion, up from INR 182.77 billion in the previous session. The one-day tri-party repo rate ended at 5.00%, slightly down from 5.05% Tuesday. The weighted average tri-party rate was at 5.19%, down from 5.30% Tuesday. The total volume in the contract was INR 4.87 trillion, slightly lower than INR 4.96 trillion Tuesday.

 

Dealers said the call rate is not expected to breach the ceiling of the Liquidity Adjustment Facility corridor this week, despite the sharp fall in the banking system liquidity surplus. The RBI is likely to intervene continuously to restrict further upside in the call rate, dealers said. "The RBI is unlikely to let the call rate cross the MSF rate (Marginal Standing Facility rate of 5.50%), it will conduct a VRR (auction) as soon as the call rate will trade near MSF," a dealer at a state-owned bank said. "Today (Wednesday) also, the RBI conducted the second VRR (auction), as soon as the call rate traded around 5.45% level."  

 

Market participants expect the RBI to conduct additional short-term variable rate repo auctions this week amid a liquidity crunch in the banking system. The central bank conducted two VRR auctions Wednesday, through which it infused a total of INR 723 billion. The first auction was oversubscribed, so the RBI conducted another one for the same quantum to fulfil the demand for funds, dealers said. Last time the RBI conducted two VRR auctions on the same day was on Mar. 30.

 

"We expect multiple VRR (auctions) this week as GST outflow is scheduled on Saturday," a dealer at a private-sector bank said. "RBI should at least come up with 1-2 days VRR (auction) for 1 lakh crore (INR 1 trillion) till Friday."

 

The liquidity surplus in the banking system fell sharply on Tuesday. The net liquidity absorbed by the RBI – a proxy for liquidity surplus – fell to INR 238.81 billion Tuesday from INR 1.51 trillion Monday. Liquidity surplus on Tuesday was the lowest in the banking system since Mar. 19, excluding the liquidity deficit reported between Mar. 20 and Mar. 22. 

 

Dealers were divided on whether the surplus liquidity would turn into a deficit this week. Some said the surplus liquidity will not turn into a deficit soon, due to inflows from coupon payments scheduled this week. The liquidity will be in deficit only after outflows for goods and services tax payments, they said. While some others said they expected the liquidity surplus to turn into a deficit before the outflows for GST payment, starting Saturday.

 

Market participants expect outflows of around INR 1.8 trillion for GST payment. Some state-owned banks are expected to maintain higher cash balances with the RBI as the new fortnight begins, which will also add pressure on the systemic liquidity surplus.    

 

The spread between the weighted average call rate and the weighted average tri-party repo rate was 16 basis points, up from 6 bps at Tuesday's close. The difference indicates the high rate in the unsecured market due to firm demand for funds amid tight liquidity conditions.

 

OUTLOOK

The one-day call money rate Thursday is expected to open above the RBI's repo rate of 5.25% on early demand from primary dealerships amid constrained liquidity, dealers said. Banks are likely to borrow to meet credit disbursal requirements during the quarter-end, they said. 

 

Dealers expect the call rate to be at 4.70–5.50% Thursday. The tri-party repo rate is expected to be in the range of 4.90–5.30%. The weighted average call rate is expected to be around 5.25–5.35%, and that of the tri-party repo market is likely to be at 5.20-5.30%, dealers said. 

 

CALL RATE

5.30%--Wednesday close for one-day loans

5.40%--Wednesday open for one-day loans

5.35%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.40	5.42
3-day	--	--
14-day	5.90	5.90
1-month	6.15	6.16
3-month	6.64	6.65

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India Call:Dips below repo on 2 VRRs, tight liquidity prevents further easing

 

MUMBAI – The one-day interbank call money rate eased below the Reserve Bank of India's repo rate rate of 5.25% as demand for funds eased after the RBI conducted two variable rate repo auctions during the day, dealers said. However, the weighted average call rate remained above the repo rate amid tight liquidity in the banking system, they said.  

 

At 1330 IST, the one-day call rate was 5.10%, lower than 5.40% at the opening and also below 5.35% at Tuesday's close. The weighted average call rate was 5.39%, slightly higher than 5.36% Tuesday. The trade volume was INR 169.54 billion, up from INR 143.19 billion at 1330 IST Tuesday. At 1335 IST, the one-day tri-party rate was 5.00%, sharply lower than 5.28% at opening and 5.05% on Tuesday. The weighted average tri-party rate was 5.26%, down from 5.30% Tuesday. The trade volume was INR 3.80 trillion, marginally up from INR 3.70 trillion at 1335 IST Tuesday.

 

Liquidity in the banking system narrowed on Tuesday to its lowest surplus since Mar. 19, excluding the brief deficit seen between Mar. 20 and Mar. 22. Market participants are factoring in upcoming goods and services tax outflows around Jun. 20, which is expected to further tighten liquidity. The RBI conducted two VRR auctions on Wednesday after outflows of around INR 1.5 trillion for advance payments of income tax and corporation tax. 

 

The net liquidity absorbed by the RBI was INR 238.81 billion Tuesday, sharply lower than INR 1.51 trillion Monday, according to the latest release. Liquidity surplus in the banking system likely fell due to advance tax outflows. 

 

"RBI conducted back-to-back VRR auctions as liquidity conditions (in the banking system) have tightened significantly, and further pressure is expected due to GST-related outflows," a dealer at a public sector bank said. "First VRR auction was oversubscribed, indicating strong demand for funds, which prompted the central bank to conduct a second auction during the day."

 

Some banks also borrowed funds to maintain cash reserve ratio requirements at the start of the reporting fortnight, while remaining cautious about future liquidity conditions. "With GST outflows ahead and uncertainty over liquidity conditions, banks are borrowing to maintain CRR at higher side in the start of the fortnight," a dealer at a private sector bank said. "PSU banks were borrowing in the call market today (Wednesday) after advance tax outflows amid a tight liquidity surplus in the (banking) system," the dealer said.

 

Some dealers said the call rate is expected to rise ahead of outflows for payment of goods and services tax and high demand for funds at the end of the Apr-Jun quarter. Meanwhile, some dealers expect the RBI to conduct another VRR auction on Thursday to roll over Wednesday's VRRs and limit a rise in the overnight call rate to the upper end of the Liquidity Adjustment Facility corridor. Outflows for goods and services tax are likely on Jun. 20. (Shumaila Firoz) 

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India Call: Up as demand rises after sharp fall in surplus liquidity

 

MUMBAI – A sharp decline in surplus liquidity pushed overnight rates to the higher end of the liquidity adjustment facility corridor Wednesday, dealers said. The call rate opened near the Reserve Bank of India's Marginal Standing Facility rate of 5.50% owing to demand from primary dealerships and some banks to meet their cash needs, they said.

 

The RBI conducted the third variable rate repo auction of the week Wednesday after outflows of around INR 1.5 trillion for advance payments of income tax and corporation tax. The liquidity surplus Tuesday fell to its lowest since Mar. 19, barring the deficit seen between Mar. 20 and Mar. 22.

 

The net liquidity absorbed by the RBI was INR 238.81 billion Tuesday, sharply down from INR 1.51 trillion Monday, according to the latest release. The absorption indicates surplus liquidity in the banking system.

 

The central bank conducted a two-day VRR auction for INR 500 billion. The VRR auction is expected to be fully subscribed with a cut-off of 5.26%, as per the median in an Informist Poll of 15 market participants. Dealers expected the subscription to be between INR 172.5 billion and INR 500 billion. 

 

"(The) RBI has been conducting VRR (auctions) regularly, to control the overnight market rate to a certain level (till repo rate)," a dealer at a public-sector bank said. "They (RBI) are also monitoring the liquidity condition in the banking system ahead of GST outflow."

 

At 0930 IST, the one-day call rate was 5.40%, up from 5.35% Tuesday. The weighted average call rate was 5.40%, also up from 5.36% Tuesday. The call money market turnover was at INR 35.40 billion, higher than INR 27.99 billion Tuesday.

 

At 0930 IST, the one-day tri-party repo rate was 5.31%, sharply up from 5.05% Tuesday's close. The weighted average rate was 5.30%, flat from Tuesday. The volume in the tri-party repo market was INR 960.11 billion, up from INR 815.18 billion Tuesday.

 

Dealers said that if the call rate continues to be on the higher side of the LAF corridor then the central bank is expected to conduct more short-term VRR auctions in the week. "RBI is monitoring call rate continuously, but if this VRR (Wednesday's two-day auction) will be fully subscribed, then we can expect more VRR (auctions)," a dealer at another public-sector bank said.

 

During the day, the call rate is expected to be in the range of 4.80-5.50%. Demand is likely to fall later in the day if the VRR auction gets good subscription. (Durgesh Nandan) 

 

End

 

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

 

Edited by Saji George Titus

 

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