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Informist, Friday, Jun. 19, 2026

 

By Durgesh Nandan

 

MUMBAI – The three-day inter-bank call money rate ended above the Reserve Bank of India's repo rate of 5.25% on demand to meet several funding requirements ahead of the weekend amid a liquidity crunch, dealers said. Banks borrowed to cover their cash needs for ongoing goods and services tax payments, credit disbursal needs near the June quarter-end and three-day funding obligations, they said. 

 

The three-day call rate ended at 5.30% Friday, up from 4.80% Thursday for one-day loans. The weighted average call rate was at 5.36%, up from 5.33% Thursday. The three-day call money volume was INR 169.10 billion, down from INR 185.01 billion for the one-day contract Thursday. Dealers expect that the RBI will restrict the rise in overnight rate below 5.50%, the top of the Liqudity Adjustment corridor, through regular liquidity infusions, even though the INR-1-trillion variable rate repo auction Friday was poorly subscribed, dealers said. 

 

"There was not much GST outflow today (Friday). The major portion of the outflow is likely to take place on Monday and a little bit on Tuesday also," a dealer at a state-owned bank said. "Banks are expected to borrow on Monday for GST-related outflow and rates are also likely to shoot up (near MSF) that day."

 

Until Friday, the RBI had conducted a total of eight auctions within 16 working days this month. The dealers expect the RBI to come up with more VRR auctions to provide temporary liquidity in the banking system. "There will be multiple VRR auctions next week, and we can see some big VRRs for more than INR 1 lakh crore (INR 1 trillion) due to maturity of INR 900 billion VRR on Tuesday," a dealer at another state-owned bank said.

 

The three-day tri-party repo rate ended at 5.19%, up from 5.00% Thursday for one-day loans. The tri-party weighted average rate was at 5.20%, also up from 5.04% Thursday. The most-traded tri-party repo contracted reported its lowest turnover in over two weeks at INR 4.79 trillion, against INR 4.88 trillion Thursday. Banks borrowed only INR 167.50 billion from the RBI at the auction at a cut-off rate of 5.26% as borrowing costs in the tri-party rate were cheaper through the day, barring a brief rise to as high as 5.30%, dealers said. 

 

The net liquidity absorbed by the RBI was INR 191.63 billion Thursday, sharply up from INR 47.71 billion Wednesday, according to the latest data. An absorption indicates surplus liquidity in the banking system. The surplus liquidity is likely to turn into deficit next week after the outflow for GST payments Monday, dealers said. Outflow for GST payments is estimated to be around INR 1.8 trillion.

 

OUTLOOK

The two-day interbank call money rate Saturday is expected to open below the RBI's repo rate of 5.25% on sluggish demand for funds, as is usual on Saturday, dealers said. GST outflows and tight liquidity in the banking system may pull up both the call money rate and volume from usual, some traders said. 

 

"There won't be much outflow for GST tomorrow (Saturday) and the volume in both the market (call and tri-party repo market) will be low as usually happens over the weekend," the dealer said.

 

Dealers expect the call rate to be at 4.60–5.25% Saturday. The tri-party repo rate is expected to be in the range of 4.80–5.20%. The weighted average call rate is expected to be around 4.90–5.15%, and that of the tri-party repo market is likely to be at 4.90-5.10%, they said. 

 

CALL RATE

5.30%--Friday close for three-day loans

5.40%--Friday open for three-day loans

4.80%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.40	5.41
3-day	--	--
14-day	5.92	5.92
1-month	6.16	6.16
3-month	6.62	6.63

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India Call: Near RBI's repo rate on demand; liquidity remains constrained

 

MUMBAI – The three-day interbank call money rate Friday fell below its opening level but remained near the Reserve Bank of India's repo rate of 5.25%. A mixture of public sector and private sector banks were borrowing amid the liquidity crunch in the banking system. Demand for funds to meet requirements over the weekend also kept rates firm in the overnight market, dealers said. 

 

At 1230 IST, the three-day call rate was at 5.20%, lower than 5.40% at the opening but higher than 4.80% at Thursday's close for one-day loans. The weighted average call rate was 5.40%, similar to Thursday at the same time. The trade volume was INR 122.69 billion, down from INR 142.92 billion at 1230 IST Thursday. 

 

Dealers were divided on whether goods and services tax-related outflows would take place Friday and even if they did, the payments are only expected to be marginal. Around 20–30% of the GST outflows are likely to take place by Saturday, while the bulk of the outflow is expected on Monday, they said. Due to the anticipated heavy outflows on Monday, some traders expect the call money rate to rise and cross the marginal standing facility rate, dealers said.

 

"We expect the weighted average rates to rise by 4 to 5 bps (basis points) Monday in both the markets (call money and tri-party repo market)," a dealer at a public sector bank said. The RBI is likely to conduct another VRR auction of at least INR 1 trillion Monday to keep the call money rate below the Marginal Standing Facility rate of 5.50%, dealers said. 

 

At 1230 IST, the three-day tri-party rate was 5.26%, higher than 5.20% at the opening and sharply up from 4.70% at Thursday's close for one-day loans. The weighted average tri-party rate was 5.20%, up from 5.15% at the same time Thursday. The trade volume was INR 3.60 trillion, up from INR 3.34 trillion at 1230 IST Thursday. "There were fewer lenders and more borrowers in the TREPs (tri-party repo) market, which pushed rates higher," a dealer at a private sector bank said. 

 

The RBI conducted a three-day variable rate repo auction of INR 1 trillion at 0930-1000 IST and accepted all bids of INR 167.50 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 rate of 5.25% and the tri-party repo rate trading below the RBI's repo rate in a range of 5.20-5.25%, dealers said. The availability of cheap funding in the tri-party repo market prompted banks to borrow there in early trade, which led to the rate rising above the repo rate of 5.25% briefly. (Shumaila Firoz) 

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India Call: Up on GST outflows, 3-day cash needs; liquidity remains tight

 

MUMBAI – The three-day interbank call money rate Friday was near the Reserve Bank of India's Marginal Standing Facility rate of 5.50% on outflows for goods and services tax payments, along with three-day funding requirement amid constrained liquidity, dealers said. Outflows for GST payments are likely to begin Friday and end Monday. "GST outflow is expected to start from today, but the majority of the payment will take place on Monday," a dealer at a state-owned bank said. The total outflow is expected to be around INR 1.8 trillion.

 

Reversal of the two two-day variable rate repo auctions for a total INR 723 billion took place Friday. The central bank had conducted the two auctions Wednesday for INR 500 billion each. The central bank also conducted a three-day variable rate repo auction for INR 1 trillion Friday, dealers said. This was the fifth VRR auction in the week. Subscription at the auction is seen at INR 700 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 500 billion and INR 800 billion.

 

"The rate is likely to shoot up after the auction, due to demand for funds on three-day borrowings. GST outflow and liquidity is also not very comfortable, so these all will put (upward) pressure on call rate later," a dealer at another state-owned bank said. "The VRR auction is not expected to get a good subscription as TREPs (tri-party repo rate)is lower, so banks will be borrowing here."

 

At 0930 IST, the three-day call money rate was 5.43%, sharply up from 4.80% Thursday for one-day loans. The weighted average call rate was also 5.43%, higher than 5.33% Thursday. The volume in the call money market was INR 36.05 billion, down from INR 49.43 billion at the same time Thursday. At 0930 IST, the three-day tri-party repo rate was 5.18%, sharply up from 4.70% Thursday for one-day funds. The weighted average rate was 5.20%, sharply higher than 5.04% Thursday. The turnover in the tri-party repo market was INR 1.82 trillion, compared with INR 1.33 trillion at the same time Thursday.

 

The net liquidity absorbed by the RBI--an indication of surplus liquidity in the banking system--was INR 191.63 billion Thursday, sharply up from INR 47.71 billion Wednesday, according to the latest data. For the rest of the day, the call rate is expected to be in the range of 4.80-5.50%. The result of the three-day VRR will be tracked, with some traders expecting the RBI to conduct a second operation Friday if the first one is oversubscribed. The call rate is likely to ease if the subscription is within expectations, dealers said.  (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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