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Informist, Monday, Jul. 13, 2026

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate ended above the Reserve Bank of India's repo rate of 5.25%, but slightly lower than Friday's close for three-day loans amid a lack of major outflows and a liquidity surplus of above INR 1 trillion. However, the reversal of the three-day variable rate repo conducted Friday, payment for the weekly gilt auction and the central bank's intervention in the foreign exchange spot market put an upward pressure on rates and the weighted average rate remained above the repo rate, dealers said. 

 

The RBI did not conduct a VRR Monday to roll-over INR 500.15 billion it had infused through Friday's operation. Rates still eased below repo for most of the day as banks with surplus liquidity due to inflows from foreign currency non-resident (bank) deposits have been lending in overnight markets, capping a rise in rates, even as most lenders are deploying funds in credit disbursements, dealers said. Banks and primary dealerships which do not have sufficient liquidity have been borrowers. Surplus liquidity had improved by Friday due to the INR-310.58-billion redemption of the 8.33%, 2026 gilt Thursday, along with some inflows via FCNR(B) deposits, dealers said. Some banks have lowered parking of funds with the RBI at the Standing Deposit Facility, they said. 

 

"I think on the fortnight-ending on Wednesday RBI may conduct a VRR, or on Thursday, Friday—closer to the start of GST outflows and the last day of the SBI MF (Mutual Fund) IPO," a dealer at a private sector bank said. "But now TREPS is trading below repo so I don't think RBI will come up with one (VRR) until then."

 

Dealers speculated that foreign inflows for initial public offerings also capped a rise in rates Monday. The funds locked up for offerings held last week are likely to ease banks' liquidity Monday Tuesday, dealers said. This week, one of India's largest IPOs this year will begin Tuesday, for SBI Funds Management for roughly INR 116 billion. This size reduced after its pre-IPO sale, which is likely to have seen participation from several foreign investors, dealers speculated. These foreign flows could boost the rupee this week, though overnight rates may see upward pressure due to funds being locked up until allocation, dealers said. The RBI is likely to have intervened by selling dollars worth at least $1 billion in the foreign exchange spot market Monday to defend the rupee, dealers in the foreign exchange market said.

 

"Rates are giving a forward indication that liquidity could increase tomorrow (Tuesday), it could go to (INR) 1.5 trillion," a dealer at a foreign bank said.  

 

The one-day call money rate ended at 5.30% Monday, slightly lower than 5.35% for three-day loans Friday. The weighted average call rate was 5.30%, down from 5.35% Friday. The volume in the market was INR 245.61 billion on Monday, against INR 229.88 billion Friday. The one-day tri-party repo rate ended at 5.10%, against 5.50% for three-day loans Friday. The weighted average rate was 5.17%, lower than the previous day's 5.20%. The volume in the TREPS market was INR 4.56 trillion, slightly less than INR 4.59 trillion in the previous session.

 

OUTLOOK

On Tuesday, the one-day interbank call money rate is seen at or above the RBI's repo rate of 5.25% as funds are expected to remain tight amid a flurry of initial public offerings and high credit growth, which is at a two-year high as per latest data, dealers said. Traders will continue to gauge the liquidity drain from intervention by the RBI in the spot rupee market. 

 

The outlook for expected inflows through the RBI's measures to shore up capital is hazy, with several banks yet to finalise their leveraging schemes for foreign currency non-resident bank deposits, and some fundraisers refraining from overseas borrowing due to high spreads amid large supply. Systemic liquidity is expected to improve if foreign-currency non-resident bank deposits pick up the pace. Banks hedging deposits under the central bank's concessional swap window will gain rupee liquidity, potentially easing money market rates, dealers said. Dealers expect flows to pick up pace by end of this month. State Bank of India economists estimate current flows through these deposits at $8-$9 billion.

 

Dealers expect the call rate to be at 4.60–5.40% Tuesday. The tri-party repo rate is expected to be in the 4.90–5.20?nd. The weighted average call rate is expected to be in the 5.20–5.30?nd, and that in the tri-party repo market is likely to be in the 5.10–5.20?nd, they said.

 

CALL RATE

5.30%--Monday close for one-day loans

5.35%--Monday open for one-day loans

5.35%--Friday close for three-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.34	5.39
3-day	--	--
14-day	5.74	5.75
1-month	6.04	6.06
3-month	6.51	6.51

 

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India Call: Near RBI's SDF as demand subsides amid sufficient liquidity

 

MUMBAI – The one-day interbank call money rate fell and was near the Reserve Bank of India's Standing Deposit Facility of 5.00% as demand for funds from market participants subsided in the latter half of the session after they met their requirements on the back of sufficient liquidity in the banking system, dealers said. However, the weighted average call rate remained above the repo rate due to initial borrowing at higher rates, they said, although the weighted average call rate is expected to cool down by the end of the session.   

 

"Some public sector banks were seen borrowing to meet their net outflow requirements," a dealer at a public sector bank said. Rates are comfortable and there is no significant funding requirement at the moment. Therefore, the RBI is unlikely to conduct a variable rate repo auction before the goods and services tax outflows. "(The) RBI may come up with a three-day VRR auction on Friday to cover up GST outflows." 

 

At 1340 IST, the one-day call rate was 5.05%, down from 5.35% at open and 5.35% Friday for three-day loans. The weighted average call rate was 5.33%, down from 5.35% Friday. The trading volume in the call money market was INR 168.20 billion, against INR 168.79 billion at 1330 IST Friday. At 1340 IST, the one-day tri-party rate was 5.01%, down from 5.23% at open and also down from 5.50% at Friday's close for three-day loans. The weighted average tri-party rate was 5.22%, up from 5.20% Friday. The trade volume was INR 3.50 trillion, against INR 3.59 trillion at 1330 IST Friday. 

 

The RBI's net liquidity absorbed, which is a proxy for liquidity surplus, was INR 1.15 trillion Sunday, similar from Saturday, against INR 1.14 trillion Friday, according to the latest data. Cash balances with the RBI was INR 7.86 trillion Sunday similar from Saturday, against the average requirement of INR 7.98 trillion for the fortnight ending Wednesday. "Most of the banks would have maintained an excess surplus, as a result only small banks appear to be borrowing at this time to fulfil their fortnightly requirements," a dealer at a private sector bank said.  (Shumaila Firoz) 

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India Call: Above repo as gilt payment, VRR reversal lift demand

 

MUMBAI – The one-day interbank call money rate traded above the Reserve Bank of India's repo rate of 5.25% Monday. Multiple initial public offerings, payment outflows for government securities after the gilt auction, and the reversal of the RBI's three-day variable rate repo auction kept demand for funds elevated, dealers said. 

 

The public issue of SBI Funds Management, one of India's largest IPOs, is scheduled for Jul. 14-16 and is likely to increase funding requirement, dealers said. 

 

"Banks were also borrowing for Monday's requirements after markets remained shut over the weekend, while outflow for payment of government securities and the reversal of the three-day VRR (variable rate repo) auction also supported demand for funds," a dealer at a public sector bank said. Outflows worth INR 320 billion for gilt auction payment and INR 500.15 billion for the reversal of VRR auction conducted on Friday.  

 

At 0930 IST, the one-day call rate was at 5.35%, similar from Friday's close for three-day loans. The weighted average call rate was at 5.35% similar from Friday. The volume in the overnight market was INR 39.60 billion, compared with INR 42.52 billion at 0930 IST on Friday. At the same time, the tri-party repo rate for one-day loans was at 5.27%, sharply down from 5.50% Friday for three-day loans, with a volume of INR 1.01 trillion. The market volume was INR 1.09 trillion at 0930 IST on Friday. The weighted average rate was 5.25%, up from 5.20% Friday. 

 

The RBI's net liquidity absorbed, which is a proxy for liquidity surplus, was INR 1.14 trillion Friday against INR 1.11 trillion Thursday, according to the latest data. Cash balances with the RBI was INR 7.87 trillion Friday similar to Thursday, against the daily average requirement of INR 7.98 trillion for the fortnight ending Wednesday.

 

"If the call rate had opened at 5.40%, the RBI might have conducted a VRR," a dealer at a small finance bank said. "As things stand, the chances of a VRR are lower, but if rates spike over the next hour or so, the RBI could still come in with a VRR." Dealers expect the weighted average call rate to ease and settle in the 5.25-5.30% range.  (Shumaila Firoz) 

 

End

 

US$1 = INR 95.6200

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

 

Edited by Deepshikha Bhardwaj

 

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