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Informist, Wednesday, Jun. 24, 2026

 

By Durgesh Nandan

 

MUMBAI - The one-day interbank call money rate Wednesday ended above the Reserve Bank of India's policy rate of 5.25% on late funding requirements from some banks to meet certain cash needs towards the close of the day, dealers said. The tri-party repo rate ended above the RBI's Marginal Standing Facility rate of 5.50% for the second time this week, reflecting strong demand in the money market amid a liquidity deficit in the banking system, they said.

 

The one-day call rate ended at 5.35%, up from 4.85% Tuesday. The weighted average call rate was 5.37%, similar to 5.38% Tuesday. Large trades early in the day at 5.45% pushed up the weighted average call rate and the session ended with 18 trades between 5.35% and 5.42?ter 1730 IST. The turnover in the overnight call contract was INR 219.19 billion, up from INR 209.70 billion Tuesday. 

 

The one-day tri-party repo rate spiked to end at 5.55%, sharply up from 5.23% Tuesday. The demand for funds during the last hour of the tri-party repo market pulled the rate above the MSF rate, dealers said. Some banks had strong funding requirements mainly to meet quarter-end cash needs, dealers said. The weighted average tri-party rate fell to 5.20%, from 5.24% Tuesday. The volume for the most-traded tri-party repo contract was INR 4.62 trillion Wednesday, compared to INR 4.88 trillion Tuesday.

 

The absence of a variable rate repo auction Wednesday and tight liquidity pulled up the tri-party repo rate, dealers said. However, with goods and services tax outflows at an end, there was lower consistent demand from banks through the day, which helped both trade volumes and the weighted average rate to ease, they said. 

 

"There is a possibility that mutual funds are facing redemption pressure due to quarter-end, and that's the reason the (tri-party repo) rate spiked," a dealer at a private-sector bank said. "...so mutual funds may have borrowed at the last hour to meet their liquidity demand."

 

Net liquidity injected by the RBI into the banking system — an indicator of liquidity deficit – was INR 148.24 billion Tuesday, down from INR 199.72 billion Monday, according to the latest release. Even with the deficit, banks raised their cash balances with the RBI to INR 7.85 trillion Tuesday from INR 7.77 trillion Monday. Even though this was below the average daily requirement for the reporting fortnight ending Jun. 30, banks had maintained a surplus last week and had a buffer to run down, dealers said. 

 

Liquidity conditions are expected to improve from next week after routine month-end spending from the government and likely inflows from the RBI's concessional dollar-rupee swap window. With a clarification on leverage released Tuesday, dealers now expect a hefty influx of dollars to park into foreign currency non-resident (bank) deposits, dealers said. 

 

"The inflows from the swap have started, but it will reflect in the next week's (liquidity) data," a dealer at another private-sector bank said. "The liquidity will turn surplus next week, and it will remain surplus for next few months."

 

OUTLOOK

The four-day interbank call money rate Thursday is likely to open above the repo rate on routine demand from primary dealerships amid liquidity deficit in the banking system, dealers said. Funding requirements from banks to meet quarter-end credit disbursal needs are also expected to support the rise in call rate, they said. Money markets are shut on Friday for Muharram.

 

Dealers had mixed views on the RBI conducting a variable rate repo auction Thursday. Some traders said the central bank would come up with a four-day VRR auction for INR 500 billion to INR 1.25 trillion as banks need liquidity due to quarter-end demand. Dealers expect the call rate to cross the MSF rate Thursday on four-day borrowings and quarter closing demand if the central bank does not conduct a VRR auction.

 

Dealers expect the call rate to be at 4.60–5.55% Thursday. The tri-party repo rate is expected to be in the range of 4.90–5.45%. 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

5.35%--Wednesday close for one-day loans

5.45%--Wednesday open for one-day loans

4.85%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.43	5.44
3-day	--	--
14-day	6.05	6.05
1-month	6.19	6.19
3-month	6.62	6.63

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India Call: Eases below SDF; liquidity deficit keeps weighted avg elevated

 

MUMBAI – The one-day interbank call money rate fell below the Reserve Bank of India's Standing Deposit Facility rate of 5.00%, after primary dealerships and some private sector banks met their cash requirements in early trade Wednesday, dealers said. However, the weighted average rate remained above the RBI's repo rate of 5.25% due to high demand for funds in the first half of the session due to liquidity deficit in the banking system, they said. 

 

At 1552 IST, the one-day call rate was at 4.75%, sharply lower than 5.45% at the opening and 4.85% at Tuesday's close. The weighted average call rate was 5.39%, marginally down from Tuesday. The trade volume in the overnight contract was INR 180.21 billion, down from INR 198.38 billion at 1530 IST Tuesday. At 1552 IST, the one-day tri-party rate was 5.40%, marginally down from the opening, and steady from Tuesday's close. The weighted average tri-party rate was 5.20%, lower than 5.24% Tuesday. The trade volume was INR 4.58 trillion, down from INR 4.65 trillion at 1530 IST Tuesday. 

 

Net liquidity injected by the RBI into the banking system — an indicator of liquidity deficit – was INR 148.24 billion Tuesday, down from INR 199.72 billion Monday, according to the latest release. 

 

Market participants were divided on whether RBI will conduct another variable rate repo auction. "Given the quarter-end dynamics, we expect the RBI come up with four-day VRR auction tomorrow (Thursday) of around INR 1.25 trillion. The call rate may trade around the MSF (marginal standing facility rate of 5.50%) rate or even move above it in upcoming session, if (the) RBI won't come up with VRR," a dealer at a state-owned bank said. "RBI's aim is to bring down rates. No matter if it is undersubscribed, they may still come up with a VRR," the dealer said.  (Shumaila Firoz)

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India Call: Up, near MSF rate on quarter-end demand, liquidity deficit 

 

MUMBAI – The one-day call money rate was up, near the Reserve Bank of India's Marginal Standing Facility rate of 5.50% on demand from some banks to meet quarter-end credit disbursal amid liquidity deficit, dealers said. Demand from primary dealers and some banks to meet funding requirements in the initial trading hours kept the one-day interbank call money rate firm Wednesday, dealers said.

At 0920 IST, the one-day call money rate was 5.45%, sharply up from 4.85% Tuesday. The weighted average call rate was also 5.45%, higher than 5.38% Tuesday. The call money market trade volume was INR 9.50 billion, sharply down from INR 51.93 billion at 0930 IST Tuesday. There is demand for funds in the money market from several banks to meet credit disbursal requirements nearing quarter-end, a dealer at a public sector bank said. 

 

At 0920 IST, the one-day tri-party repo rate was 5.18%, down from 5.40% Tuesday. The weighted average rate was 5.20%, marginally down from 5.24% the previous day. The turnover in the tri-party repo market was INR 938.64 billion, compared with INR 900.82 billion at 0930 IST Tuesday.

 

Net liquidity injected by the RBI into the banking system — an indicator of liquidity deficit – was INR 148.24 billion Tuesday, down from INR 199.72 billion Monday, according to the latest release. The liquidity deficit fell slightly due to coupon payments of INR 820.5 billion from state bond and two government bonds Tuesday.

 

"Liquidity is squeezed and quarter-end requirements from banks are keeping the rate high, that is why the call rate is high despite the RBI's liquidity infusion," a dealer at another state-owned bank said. "Demand is likely to remain strong in the first half, (call) rate may ease later once funding requirements are met."

 

Most dealers expect the RBI to conduct a VRR auction Wednesday if the call rate remains towards the higher end of the Liquidity Adjustment Facility corridor. A few dealers said it is unlikely for the central bank to conduct any VRR auction this week as it had already infused INR 1.41 trillion through Tuesday's seven-day auction. 

 

For the rest of the day, the call rate is expected to be at 4.80-5.45%. The weighted average call rate is likely to remain near the repo rate due to funding requirements in the first half of the day amid liquidity deficit, they 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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