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Informist, Tuesday, Jun. 30, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate Tuesday ended near the Reserve Bank of India's Marginal Standing Facility rate of 5.50% on funding requirements from banks during the last hour of the market amid a liquidity deficit in the banking system, dealers said. Demand for funds from banks at the end of the June quarter and on the last day of the reporting fortnight pushed up weighted average rates in the call and tri-party repo markets, with both unsecured and secured funding costs topping the Marginal Standing Facility rate during the day. 

 

The one-day call money rate ended at 5.45%, up from 5.35% Monday. The weighted average call rate was at 5.43%, also higher than 5.34% Monday. The call money market turnover was INR 122.88 billion, down from INR 173.08 billion Monday.

 

The one-day tri-party repo rate ended at 5.55%, up from 5.10% Monday. The weighted average rate rose to 5.39%, from 5.25% Monday. The volume in the overnight contract was INR 4.33 trillion, compared with INR 4.46 trillion Monday. The tri-party repo market traded in the range of 5.26–5.75% through the day. This was the first time since January 2025 that the tri-party rate traded above the policy repo rate for a full day, a reflection of demand for funds in the broader market where mutual funds are the biggest lenders.

 

Dealers also had no clue about why banks or other market participants borrowed funds from the market at a higher rate than the potentially lower rates at the variable rate repo auction Tuesday. The central bank conducted an overnight VRR auction of INR 750 billion, which was expected to be fully subscribed, according to an Informist Poll. It accepted all INR-694.13-billion bids at cut-off rate of 5.26%.

 

"I am unable to understand why the market did not borrow when the RBI was offering (funds) to them at 5.26% but later, they borrowed at a much higher rate," a dealer at a state-owned bank said. "Maybe they (borrowers) were waiting for the rates to cool down in the second half but it did not happen, if they had borrowed it from the VRR (auction) then the RBI would have surely conducted the second (auction) today (Tuesday)."

 

The net liquidity injected by the RBI into the banking system--a proxy for the systemic liquidity deficit--was INR 130.77 billion Monday, down from INR 415.63 billion Sunday, according to the latest release. The decline in the liquidity deficit was likely due to inflows from the central government in the form of salaries and pensions, dealers said. A major portion of the expenditure is yet to come, it is expected to be transferred Tuesday into the banking system, dealers said. 

 

"I think liquidity may turn surplus tomorrow (Wednesdayy), but it will be much less than 50 thousand crore to 60 thousand crore (INR 500 billion to INR 600 billion) but by the end of this week we could see the surplus liquidity near 2 lakh crore (INR 2 trillion)," a dealer at another state-owned bank said. "Our bank has received some inflows, but it's negligible as only 6 thousand to 7 thousand crore (INR 60 billion-INR 70 billion) have been transferred so far (from the central government)."

 

OUTLOOK

The one-day interbank call money rate Wednesday is likely to open above the RBI's repo rate as primary dealers and some banks will borrow early to meet routine payments, dealers said. The reversal of INR 1.44 trillion from two VRR auctions conducted earlier this week are scheduled for Wednesday.

 

The RBI has announced a two-day, INR 1.25 trillion VRR auction on Wednesday, which will help banks meet their funding needs below the Marginal Standing Facility rate of 5.50%, dealers said. Borrowing requirements are also expected to ease at the beginning of the reporting fortnight and a new quarter, which is likely to bring back lenders into the market and may help money market volumes bounce back. 

 

Dealers expect the call rate to be at 4.60–5.50% Wednesday. The tri-party repo rate is expected to be in the 4.90–5.45?nd. The weighted average call rate is expected to be in the 5.25–5.35?nd, and that of the tri-party repo market is likely to be in the 5.20–5.30?nd, they said. 

 

CALL RATE

5.45%--Tuesday close for one-day loans

5.50%--Tuesday open for one-day loans

5.35%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.50	5.43
3-day	--	--
14-day	6.01	6.02
1-month	6.20	6.19
3-month	6.61	6.61

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India Call: Eases slightly after VRR, remains above repo on qtr-end demand

 

MUMBAI – The one-day interbank call money rate fell slightly below its opening level but remained above the Reserve Bank of India's repo rate of 5.25% Tuesday on the back of ongoing demand for funding requirements to maintain sufficient cash balances on the last day of the reporting fortnight and quarter-end amid a liquidity deficit in the banking system, dealers said. Banks used the variable rate repo auction conducted by the RBI to help meet their funding needs, though the auction was not fully subscribed, a surprise to traders. 

 

"The (VRR) auction would ordinarily have been expected to be oversubscribed, but month-end government spending, including salary-related inflows, may have reduced banks' immediate funding requirements and led to lower demand at the auction," a dealer at public sector bank said. 

 

The RBI conducted an overnight variable rate repo auction of INR 750 billion at 0930-1000 IST and accepted all bids of INR 694.13 billion at a cut-off rate of 5.26%. An Informist poll showed the median expectation was a full subscription. The call rate traded in the range of 5.15-5.60% and the tri-party repo rate traded at 5.30-5.35% during the auction, making it cheaper to borrow from the RBI with the minimum cut-off being 5.26%.

 

With government spending coming in, banks did not have to roll over the seven-day VRR of INR 1.41 trillion that matured Tuesday, dealers said. Even as the call and tri-party repo rates are trading at or above the repo rate, dealers said the RBI is unlikely to conduct another VRR auction Tuesday since the first one was not fully subscribed.

 

At 1148 IST, the one-day call rate was at 5.40%, lower than 5.50% at open and but higher than 5.35% at Monday's close. The weighted average call rate was 5.50%, up from 5.34% Monday. The weighted average call rate was at the Marginal Standing Facility rate of 5.50%, indicating that tight liquidity conditions have pushed up rates, dealers said. At 1230 IST, the trade volume in the overnight contract was INR 72.27 billion, sharply lower than INR 95.88 billion at the same time Monday.

 

At 1148 IST, the one-day tri-party rate was 5.32%, lower than 5.35% at open, but up from 5.10% at Monday's close. The weighted average tri-party rate was 5.33%, inching higher than 5.25% Monday. At 1230 IST, the trade volume was INR 2.41 trillion, lower than INR 2.70 trillion at the same time Monday. Lenders in both the call and tri-party repo market avoided lending across the quarter-end, bringing down volumes, dealers said. 

 

Dealers said overnight rates are likely to remain above the repo rate at the close. In the coming days, demand for funds at the beginning of the new reporting fortnight is likely to fall, which may help rates ease. The government's month-end spending is also likely to swing banking system liquidity into a surplus, after eight days of deficit, dealers said. The net liquidity injected by the RBI into the banking system--a proxy for the systemic liquidity deficit--was INR 130.77 billion Monday.

 

"If the RBI's liquidity infusion through Tuesday's government securities buyback auction had been fully subscribed, system liquidity could have moved into surplus, easing funding pressures and cooling overnight rates," a dealer at another public sector bank said. The RBI accepted bids worth only INR 73.88 billion at the government buyback auction Monday, against the notified amount of INR 300 billion.  (Shumaila Firoz) 

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India Call: Up, at MSF rate on firm demand for funds amid liquidity deficit

 

MUMBAI – The one-day interbank call money rate remained firm at the Reserve Bank of India's Marginal Standing facility rate of 5.50% Tuesday as demand for overnight funds increased to meet month-end, quarter-end, and fortnight-end requirements, dealers said. Although the liquidity deficit decreased Monday, systemic liquidity still remained in deficit. 

 

At 0930 IST, the one-day call money rate was 5.50%, up from 5.35% Monday. The weighted average call rate was 5.50%, also higher than 5.34% Monday. The call money market trade volume was INR 5.86 billion, down from INR 13.30 billion at 0930 IST Monday. At 0930 IST, the one-day tri-party repo rate was 5.33%, up from 5.10% Monday. The weighted average rate was 5.32%, higher than 5.25% Monday. The turnover in the tri-party repo market was INR 518.04 billion, compared with INR 590.88 billion at 0930 IST Monday. 

 

The net liquidity injected by the RBI into the banking system--a proxy for the systemic liquidity deficit--was INR 130.77 billion Monday, down from INR 415.63 billion Sunday. The inflow from the central government is likely to begin Tuesday, dealers said. The reversal of INR 1.41 trillion under the seven-day variable rate repo auction also supported the demand for overnight funds, dealers said.

 

To offset the impact of the reversal, the central bank conducted an overnight VRR auction for INR 750 billion Tuesday to provide temporary liquidity in the banking system, dealers said. The overnight VRR auction is expected to be fully subscribed with a cut-off of 5.26%, as per the median in an Informist poll of 13 market participants. Dealers expected the subscription to be between INR 175 billion and INR 750 billion.

 

"If the partial allotment (of bids received at a cut-off rate) falls below 80–70%, then we can expect a second VRR today (Tuesday)," a dealer at a state-owned bank said. Dealers expect overnight rates to remain at the upper end of the Liquidity Adjustment Facility corridor during the day due to liquidity deficit and funding requirements.  (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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