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Informist, Thursday, Jul. 16, 2026

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate ended at the Reserve Bank of India's Marginal Standing Facility rate of 5.50% Thursday, higher than Wednesday's close, as several banks bid for the maximum possible subscription for the initial public offering of SBI Funds Management on its last day. The offering is one of India's largest this year. Qualified institutional buyers usually invest in IPOs on the last day, dealers said. Moreover, the overnight variable rate repo operation for INR 750 billion, which the RBI conducted Thursday, was poorly subscribed at INR 184.25 billion, pushing up demand for funds later in trade. 

 

"We're going for the full book size for the IPO, so next few days that much money will be locked up," a dealer at a state-owned bank said. However, once funds locked up for the IPO are released, systemic liquidity could increase if foreign investors are alloted shares, since they also participated in the IPO Thursday, dealers said. 

 

In the afternoon, the call rate hit the day's high of 5.70%, the highest since May 8. The tri-party repo rate hit the day's high of 5.85%. Several traders were expecting the rise in rates after the overnight VRR saw poor subscription despite such heavy demand for funds, they said. Funds for the IPO are likely to be released only by Monday, by when tax payments are likely to begin, dealers said. In line with expectations, post market hours, the RBI said it would conduct a three-day VRR for INR 750 billion Friday. Some traders were expecting a longer tenure due to goods and services tax payments. The VRR is likely to see strong subscription, dealers said. 

 

The one-day call money rate ended at 5.50% Thursday, higher than 5.35% Wednesday. The weighted average call rate was 5.35%, up from 5.24% Wednesday. The volume in the market was INR 212.29 billion Thursday, higher than INR 184.01 billion Wednesday. The one-day tri-party repo rate ended at 5.50%, up from 5.45% Wednesday. The weighted average rate was 5.32%, sharply higher than the previous day's 5.13%. The volume in the TREPS market was INR 4.71 trillion, up from INR 4.58 trillion in the previous session.

 

OUTLOOK

On Friday, the three-day interbank call money rate is seen above the RBI's repo rate of 5.25% as funds will be locked up in the IPO of SBI Funds Management, while banks will provide for three-day funding requirements and prepare for payments of goods and services tax of around INR 1.8 trillion beginning early next week, dealers said. 

 

Dealers expect the call rate to be at 4.60–5.50% Friday. The tri-party repo rate is expected to be in the 4.90–5.30?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 5.00–5.20?nd, they said.

 

CALL RATE

5.50%--Thursday close for one-day loans

5.35%--Thursday open for one-day loans

5.35%--Wednesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	THURSDAY	WEDNESDAY
Overnight	5.36	5.27
3-day	--	--
14-day	5.75	5.75
1-month	6.03	6.04
3-month	6.56	6.54

 

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India Call: Weighted avg above repo; cash needs up as liquidity stuck in IPO

 

--Dealers: Cash parked for SBI Funds Mgmt IPO cuts liquidity available to bks 
--Dealers: Bks bidding in large size for SBI Funds Mgmt IPO, upping cash need 
--Dealers: Tri-party repo rate shoots above MSF rate on bks' demand for funds

 

NEW DELHI – The one-day interbank call money rate eased from its opening level and was below the Reserve Bank of India's Standing Deposit Facility rate of 5.00?ter primary dealers met their early demand for funds. However, the weighted average call rate was well above the policy repo rate of 5.25% as banks were borrowing heavily both in call and the tri-party repo market as a large quantum of the systemic liquidity surplus was being parked in the initial public offering of SBI Funds Management until Monday, dealers said.

 

Banks were bidding for the marquee offer for sale worth over INR 98 billion through the fully accessible route through the qualified institutional buyer route on the last day of subscription. Several lenders were going for a "full book" subscription of INR 62 billion each, reducing individual liquidity pools for daily cash management needs, dealers said. Moreover, some amount of deposits linked to the accounts of retail bidders for the public offering would also keep liquidity in limbo until the beginning of next week, dealers said.

 

"The stress in the market is coming in because of the IPO, nothing else," a dealer at a state-owned bank said. "There is a big liquidity mismatch in the market now because both own funds and deposits are stuck in the IPO for the next two working days." The 'Application Supported by Blocked Amount' facility by the Securities and Exchange Board of India blocks the funds in traders account with a reversal of the day of allotment in case the shares are not allotted.

 

At 1500 IST, the one-day call rate was at 4.95%, lower than 5.35% at open and 5.35% at Wednesday's close. The weighted average call rate was 5.34%, higher than 5.24% Wednesday. The trade volume in the call market was INR 166.72 billion, higher than INR 146.54 billion at the 1430 IST Wednesday. At 1500 IST, the one-day tri-party rate was 5.75%, the higest intraday level since the quarter-end on Jun. 30. The weighted average tri-party rate was 5.30%, sharply up from 5.13% Wednesday. The trade volume in the tri-party repo market was INR 4.37 trillion, higher than INR 3.80 trillion at 1430 IST Wednesday. 

 

The influx of dollars for the IPO subcription and the rupee liquidity crunch in the market also pushed up near-term dollar-rupee forward rates. The cost of converting dollars to rupees immediately for reversal Friday, captured by the cash-tom rate, effectively rose to around 9%, dealers said. 

 

The variable rate repo auction conducted earlier Thursday was poorly subscribed as overnight rates were lower at 0930-1000 IST when bidding was held, dealers said. The RBI accepted all INR-184.25-billion bids at its overnight, INR-750-billion auction at a cut-off rate of 5.26%. The poor subscription was one reason why money market rates had risen in the afternoon, which had been widely expected by traders. The RBI's net liquidity absorbed, which is a proxy for banking system liquidity surplus, was INR 1.31 billion Wednesday, down from INR 1.49 trillion Tuesday, according to the latest data.  (Aaryan Khanna)

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India Call: At repo rate on early need, seen up later on IPO demand

 

MUMBAI – The one-day interbank call money rate was at the Reserve Bank of India's repo rate of 5.25% due to early demand for funds from primary dealerships and some banks, but down from Wednesday, dealers said. They expect the rate to rise further later during the day to meet the demand for funds from the initial public offering.

 

The tri-party repo rate was below the policy rate before 0930 IST but inched up to 5.25% later due to demand for funds as it is the last day of the initial public offering of SBI Funds Management. To support the banking system, the RBI also conducted an overnight variable rate repo auction for INR 750 billion between 0930 IST and 1000 IST. 

 

According to the median of an Informist poll of 10 market participants, the RBI is likely to set a cut-off of 5.26% at the auction and subscription is seen at INR 500 billion. Dealers were divided about the subscription amount at the auction. Some dealers expect a decent subscription, which is almost 70%, but some also expect it to be poorly subscribed at just INR 100 billion.  

 

"Overnight rates are low, so I expect only 10,000-20,000 crores (INR 100 billion to INR 200 billion) subscription at the auction," a dealer at a foreign bank said. However, dealers who expect low subscription at the auction, see the overnight rates surging in the second-half of the trading session due to demand from the initial public offering. "TREPS (rate) will shoot up as liquidity is not great, there is pressure from fx swap (forex). We can see demand for IPO already affecting cash tom and there will be a spillover of that on overnight rates too," the dealer said.   

 

At 1007 IST, the one-day call rate was at 5.25%, down from 5.35% Wednesday. The weighted average call rate was at 5.36%, up from 5.24% Wednesday. The volume in the overnight market was INR 88.90 billion, compared with INR 63.25 billion at 0930 IST Wednesday.

 

At 1007 IST, the tri-party repo rate for one-day loans was at 5.27%, down from 5.45% Wednesday. The weighted average rate was 5.22%, up from 5.13% Wednesday. The volume in the tri-party market was INR 2.41 trillion, compared with INR 1.23 trillion at 0930 IST Wednesday. The tri-party repo rate may rise to 5.50% in the second-half of the day, dealers said.   (J. Navya Sruthi)

 

End

 

US$1 = INR 96.3450

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

 

Edited by Avishek Dutta

 

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