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Informist, Thursday, Jun. 18, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate ended below the Reserve bank of India's repo rate of 5.25% Thursday as demand for funds eased after market participants met their requirements early in the day, dealers said. However, the weighted average call rate remained above repo rate Thursday reflecting the firm demand in the money market ahead of the major scheduled outflow for goods and services tax, which is likely to begin Friday, dealers said.   

 

The one-day call rate ended at 4.80% Thursday, its lowest closing level in two weeks, down from 5.30% Wednesday. The weighted average call rate was at 5.33%, down slightly from 5.35% the previous day. The call market turnover was INR 185.01 billion, down from INR 208.40 billion Wednesday. The call rate traded towards the lower end of the Liquidity Adjustment Facility corridor during the second half of the day, after market participants met their funding needs early in the day, dealers said. 

 

The tri-party repo rate ended at 4.70%, down sharply from 5.00% Wednesday. The tri-party weighted average rate was at 5.04%, down from 5.19% Wednesday. The total transactions in the tri-party repo market amounted to INR 4.88 trillion, up marginally from INR 4.87 trillion Wednesday. The sharp fall in the tri-party rate was attributed to reduced demand for funds from banks, having already borrowed from the RBI INR 1.62 trillion through three outstanding variable rate repo auctions.

 

"Since banks have already borrowed INR 1.6 trillion from the RBI, mutual funds have enough cash to lend and that's why the (tri-party repo) rate went below the SDF also," a dealer at a state-owned bank said. "Tomorrow will be a little tricky as there are (VRR) maturities along with fresh tax outflows, so the RBI should bring in continuous support."

 

The net liquidity absorbed by the RBI, an indication of surplus liquidity in the banking system, was INR 47.71 billion Wednesday, the lowest since a deficit on Mar. 22 and sharply down from INR 238.81 billion Tuesday. Surplus liquidity fell as banks maintained higher than required cash balances with the RBI. Cash balances rose to INR 8.26 trillion Wednesday, from INR 8.04 trillion Tuesday.

 

Banks parked more funds with the RBI despite tight liquidity to avoid the rush to meet cash reserve ratio near the end of the June quarter, which is also the conclusion of the current reporting fortnight, dealers said. Moreover, the liquidity injected from the RBI through the VRR auctions had dragged down the net liquidity absorbed number, with banks' cash positions more comfortable than the headline number suggested, they said. 

 

The GST outflow is expected to begin Friday and is likely to continue till Monday with an estimated outflow of around INR 1.8 trillion from the banking system. Dealers expected the RBI to conduct a three-day VRR auction Friday for a minimum quantum of INR 1 trillion, since two auctions worth INR 723 billion were maturing, dealers said. 

 

"The call rate is unlikely to cross MSF (Marginal Standing Facility rate of 5.50%) rate tomorrow (Friday), as we are expecting the RBI will coonduct the VRR (auction) to ease the liquidity pressure in the market," a dealer at another public-sector bank said. "Maybe next week we can see the call rate above after the GST outflow." After market hours Thursday, the central bank announced a three-day, INR 1.00 trillion VRR auction at 0930-1000 IST. 

 

OUTLOOK

On Friday, the three-day call money rate is expected to open above the RBI's repo rate of 5.25% on three-day borrowing from primary dealerships and some banks amid tight liquidity, dealers said. GST payments are likely to begin Friday with an estimated outflow of INR 1.5 trillion to INR 1.8 trillion from the banking system by Monday.

 

Banks may also borrow in early trade before the RBI's VRR auction at 0930-1000 IST. Banks are likely to roll over their borrowings at the auction, with two VRRs that have injected INR 723 billion of liquidity into the banking system reversing on Friday, dealers said. Banks' need for funds is likely to remain high due to the GST outflows and credit disbursal uptick near the end of the June quarter.

 

Dealers expect the call rate to be at 4.60–5.50% Friday. 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

4.80%--Thursday close for one-day loans

5.45%--Thursday open for one-day loans

5.30%--Wednesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	THURSDAY	WEDNESDAY
Overnight	5.41	5.40
3-day	--	--
14-day	5.92	5.90
1-month	6.16	6.15
3-month	6.63	6.64

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India Call: Slips below RBI's SDF rate; liquidity crunch persists

 

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 eased after the early requirements of primary dealers and banks were met, dealers said. The weighted average call rate remained above the policy repo rate of 5.25% due to high demand for funds amid a liquidity crunch in the banking system, they said.

 

The net liquidity absorbed by the RBI, an indication of surplus liquidity in the banking system, was INR 47.71 billion Wednesday, sharply lower than INR 238.81 billion Tuesday. Liquidity with banks was at its lowest since Mar. 22, when the system was in a deficit of INR 654 billion.

 

"Rates are a bit lower today (Thursday) because banks borrowed in yesterday's (Wednesday) VRR (variable repo rate) auction," a dealer at a public sector bank said. "If RBI had not conducted the VRR, rates would have likely crossed the MSF (marginal standing facility rate) today." As of Thursday, the RBI has infused liquidity totalling INR 1.62 trillion through three VRR auctions.

 

At 1430 IST, the one-day call rate was 4.85%, sharply lower than 5.45% at the opening and also below 5.30% at Wednesday's close. The weighted average call rate was 5.37%, slightly up from 5.35% Wednesday. The trade volume was INR 173.09 billion, down from INR 194.53 billion at 1430 IST Wednesday.

 

At 1430 IST, the one-day tri-party rate was 4.89%, lower than 5.25% at the opening and 5.00% at Wednesday's close. The weighted average tri-party rate was 5.10%, down from 5.23% at the same time Wednesday. The trade volume was INR 4.08 trillion, slightly down from INR 4.15 trillion at 1430 IST Wednesday. 

 

"Liquidity is tight in the banking system, and banks are increasingly relying on overnight borrowing. RBI is mainly infusing transient liquidity, not durable liquidity, which is keeping overall conditions strained," a dealer at a private sector bank said. "Apart from this, credit growth continues to outpace deposit growth, further increasing reliance on short-term borrowing. Pressure from certificate of deposit redemptions has also added to funding requirements," the dealer quoted above said. 

 

Banks' cash balances with the RBI rose to INR 8.26 trillion Wednesday from INR 8.04 trillion Tuesday, well above the average requirement of INR 8.01 trillion in the Jun. 30 fortnight. Dealers said this is typical at the start of a reporting fortnight, when banks tend to hold surplus reserves and gradually reduce them later. Moreover, systemic liquidity is likely to slip into a deficit by next week due to goods and services tax outflows.

 

There were mixed views among dealers on the timing of GST-related outflows. Some expect major GST outflows to begin on Friday, which could start impacting rates immediately. Others believe that since the 20th falls on a Saturday and trading activity is usually thin, the bulk of outflows will be seen on Monday. Outflows of INR 1.5 trillion to INR 2 trillion for GST tax payments are expected.

 

"Liquidity will move into deficit after GST outflows," a dealer at another public sector bank said. "Rates are expected to rise next week and remain elevated till the end of June, unless government spending comes in." Market participants expect the RBI to conduct a VRR auction of INR 1 trillion for four-day tenure on Friday to roll over Wednesday's VRRs and limit the rise in the overnight call rate to the upper end of the Liquidity Adjustment Facility corridor ahead of the GST outflows.  (Shumaila Firoz)  

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India Call: Up on qtr-end need ahead of GST outflows as liquidity surplus dn

 

MUMBAI – Tightened liquidity and demand from market participants combined to keep the overnight rates up Thursday, dealers said. Funding demand from banks, mainly to meet credit disbursal requirements with the quarter-end looming, supported the rise near the Reserve Bank of India's Marginal Standing Facility rate of 5.50%, they said. 

 

At 0930 IST, the one-day call rate was 5.43%, up from 5.30% Wednesday. The weighted average call rate was 5.43%, also up from 5.35% Wednesday. The call-money market turnover was INR 49.43 billion, up from INR 35.40 billion at the same time Wednesday. Dealers expect the weighted average call rate to remain towards the ceiling of the liquidity adjustment facility corridor because of tighter liquidity in the banking system. Some public-sector banks also borrowed funds in early trade to fulfil their quarter-end requirements, dealers said.

 

"(The) call rate is less likely to cross MSF (Marginal Standing Facility rate of 5.50%) today (Thursday); even if it will, then only for one to two trades," a dealer at a public-sector bank said. "As there will be no rush for funds in the market today (Thursday) for GST (goods and services tax) outflow."

 

At 0930 IST, the one-day tri-party repo rate was 5.17%, up from 5.00% Wednesday. The weighted average rate was at 5.24%, slightly up from 5.19%. The volume in the tri-party repo market was INR 1.33 trillion, up from INR 960.11 billion the previous day.

 

The net liquidity absorbed by the RBI, an indication of surplus liquidity in the banking system, was INR 47.71 billion Wednesday, sharply down from INR 238.81 billion Tuesday. Surplus liquidity fell as banks maintained higher cash balances with the RBI. Cash balances rose to INR 8.26 trillion Wednesday, from INR 8.04 trillion Tuesday. Banks usually maintain higher cash balances at the start of the fortnight. Outflows of around INR 1.8 trillion for GST payments are likely to absorb a significant portion of the surplus liquidity by the end of the week.

 

"We expect RBI to come with more VRRs (variable rate repo auctions) tomorrow (Friday), due to GST outflow (scheduled Saturday)," the dealer said. "Even if call rate will trade near MSF, they (RBI) are unlikely to conduct the VRR today (Thursday) as they conducted two VRRs yesterday." The central bank conducted two two-day VRR auctions Wednesday and infused a total of INR 723 billion.

 

During the day, the call rate is expected to be in the range of 4.80-5.50%. Dealers are likely to watch for the next operation from the RBI to ease the liquidity pressure.  (Durgesh Nandan) 

 

End

 

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

 

Edited by Akul Nishant Akhoury

 

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