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Informist, Tuesday, Jun. 23, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand eased after the central bank infused INR 1.41 trillion through a seven-day variable rate repo auction, dealers said. The high weighted-average call rate and the rise in volumes from Monday indicated a concentration of demand in the first half of the day, they said.

 

The central bank Tuesday conducted the tenth variable rate repo auction for the month and accepted all bids against the notified amount of INR 2.00 trillion. This was the most liquidity it has infused through a VRR auction since December. There was heavy demand for funds amid tax outflows and a liquidity deficit in the banking system, dealers said. 

 

The one-day call rate ended at 4.85%, down from 5.40% Monday. However, the weighted average call rate rose to 5.38% from 5.33% Monday. The call money market turnover was INR 209.70 billion, up from INR 191.52 billion Monday. There were no trades in the call market after 1726 IST. 

 

The one-day tri-party repo rate ended at 5.40% Monday, down from 5.50% Monday. The tri-party weighted average rate also fell to 5.24% from 5.29% Monday. The volume for the most-traded tri-party repo contract was INR 4.88 trillion Tuesday, compared to INR 4.85 trillion Monday. Although the tri-party repo rate trended lower through the afternoon, it likely shot up late in the session as some banks scrambled to boost their cash balances with the RBI, a dealer at a state-owned bank said. 

 

Liquidity in the banking system slipped into a deficit for the first time since Mar. 22, primarily due to outflows related to goods and services tax payments of around INR 1.8 trillion since Friday. Most of these outflows took place on Monday. Net liquidity injected by the RBI into the banking system — an indicator of liquidity deficit – was INR 199.72 billion Monday, compared with surplus liquidity of INR 306.85 billion Sunday, according to the RBI. 

 

"Whatever amount was left for GST outflow took place today (Tuesday), so now banks will need funds as it is the quarter-end month to show growth in their top-line," a dealer at a state-owned bank said. "Banks try to give more loans at the quarter-end month so they will borrow more in the call market during this time."

 

Banks' cash balances with the RBI declined to INR 7.77 trillion Sunday, from INR 8.05 trillion Sunday. Banks have maintained cash balances of INR 8.06 trillion on average during the first week of the fortnight, exceeding the average requirement of INR 8.01 trillion they need to maintain till Jun. 30. 

 

OUTLOOK

On Wednesday, the one-day call money rate is likely to open above the RBI's repo rate of 5.25% due to initial demand for funds to meet payment obligations ahead of quarter-end, dealers said. Funding requirements to meet quarter-end credit disbursal needs from the banks are expected to keep the weighted average call rate above the policy rate, they said.

 

Most dealers expect the RBI to conduct more liquidity infusions this week of INR 500 billion to INR 750 billion, while some others said it will not conduct any auctions after Tuesday's VRR, which infused INR 1.41 trillion. This was seen as sufficient to tide banks over until month-end spending by the central government is likely to begin next week, dealers said. 

 

Dealers expect the call rate to be at 4.60–5.50% Wednesday. The tri-party repo rate is expected to be in the range of 4.90–5.40%. 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

4.85%--Tuesday close for one-day loans

5.45%--Tuesday open for one-day loans

5.40%--Monday close for two-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.44	5.38
3-day	--	--
14-day	6.05	5.98
1-month	6.19	6.16
3-month	6.63	6.62

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India Call: Falls to SDF rate as banks borrow at VRR amid liquidity deficit

 

MUMBAI – The one-day interbank call money rate fell sharply and slipped to the Reserve Bank of India's Standing Deposit Facility rate of 5.00?ter the variable rate repo auction Tuesday provided liquidity amid a deficit in the banking system. The demand for funds was persistent from banks and primary dealerships but they were able to meet a portion of it at the auction, dealers said.

 

The RBI conducted a seven-day variable rate repo auction of INR 2 trillion at 0930-1000 IST and accepted all bids of INR 1.41 trillion. Demand at the auction was good as market participants found borrowing in the tri-party repo rate higher 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 above the RBI's repo rate in a range of 5.27-5.30%, dealers said.

 

At 1450 IST, the one-day call rate was at 5.00%, lower than 5.45% at the opening and 5.40% at Monday's close. The weighted average call rate was 5.40%, up from 5.33% Monday. The trade volume in the overnight contract was INR 197.78 billion, up from INR 160.87 billion at 1430 IST Monday. At 1450 IST, the one-day tri-party rate was 5.06%, down from 5.28% at the opening and also from 5.50% at Monday's close. The weighted average tri-party rate was 5.25%, lower than 5.29% Monday and trending lower. The trade volume was INR 4.35 trillion, slightly up from INR 4.20 trillion at 1430 IST Monday.

 

Liquidity in the banking system turned deficit on Monday, for the first time since Mar. 22, after outflows for the payment for goods and services tax. The net liquidity injected in the banking system by the RBI – a proxy for the liquidity deficit – was INR 199.72 billion Monday, against net liquidity absorbed INR 306.85 billion Sunday. Liquidity conditions are expected to remain tight until Jun. 29, with improvement likely only after government spending picks up at the month-end, which could infuse funds into the banking system, dealers said.

 

This also led to increased demand for funds at the VRR auction, in which banks typically avoid participating in tenures longer than overnight or two days. Seasonal demand for funds from banks for credit disbursal near the end of the June quarter has also led to an increased need for liquidity close to the month-end, especially with the reporting fortnight also ending on Jun. 30.

 

Market participants are also closely monitoring mutual fund activity for signs of redemption pressure. While the tri-party rate softened Tuesday, dealers said redemptions from liquid funds at the quarter-end may lead to a rise in money market rates over the next few days. (Shumaila Firoz) 

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India Call: At RBI's MSF rate on liquidity deficit amid GST outflows 

 

MUMBAI – The one-day interbank call money rate was up Tuesday and at the Reserve Bank of India's Marginal Standing Facility rate of 5.50% as funding requirements remained firm with goods and services tax outflows underway and quarter-end needs, dealers said. Early demand for funds from primary dealerships and some banks for regular payment obligations amid a liquidity deficit also supported higher call rate, they said.

 

At 0930 IST, the one-day call money rate was 5.50%, up from 5.40% Monday. The weighted average call rate was 5.45%, also higher than 5.33% Monday. The call money market trade volume was INR 51.93 billion, up from INR 36.08 billion at the same time Monday. At 0930 IST, the one-day tri-party repo rate was 5.30%, down from 5.50% Monday. The weighted average rate was 5.30%, marginally up from 5.29% the previous day. The turnover in the tri-party repo market was INR 900.82 billion, compared with INR 1.32 trillion at the same time Monday.

 

Systemic liquidity turned deficit for the first time since Mar. 22 owing to outflows for tax payments. According to the latest data, the net liquidity injected by the RBI into the banking system--a proxy for the systemic liquidity deficit--was INR 199.72 billion Monday, against surplus liquidity of INR 306.85 billion Monday.

 

To support the banking system, the RBI Tuesday conducted a seven-day variable rate repo auction for INR 2 trillion. Despite deficit liquidity in the system, dealers do not expect the VRR to be fully subscribed as it is for seven days. Subscription at the auction is seen at INR 1.25 trillion, with a cut-off of 5.26%, as per the median in an Informist poll of 15 market participants. Dealers expect the bids at the auction to be between INR 300 billion and INR 1.75 trillion. 

 

Dealers expect the call rate to remain near the upper-end of the Liquidity Adjustment Facility corridor in the first half of the day. A decent subscription to the VRR auction could ease the demand later in the day, they said. 

 

Dealers said the size of the auction reflects the fact that the RBI wants to offset the liquidity drain caused mainly by goods and services payments and quarter-end funding requirements. "If the auction gets a good subscription, some of the pressure on overnight rates is likely to ease in the second half of the day," a dealer at a public-sector bank said.

 

The central bank conducted the auction to temporarily relieve the liquidity deficit in the banking system amid outflows around INR 1.8 trillion for GST payments. "Most of the outflow have already happened, but some outflow is likely to take place today (Tuesday) also," a dealer at another state-owned bank said.  End

 

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

 

Edited by Saji George Titus

 

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