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Informist, Monday, Jul. 20, 2026

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate ended above the Reserve Bank of India's repo rate Monday and much higher than its close Saturday due to demand for funds amid outflows of about INR 1.80 trillion this week for goods and services tax payments, amid tight liquidity. However, the tri-party repo rate cooled near the end of trade, with funds released from the allotment of shares of the SBI Funds Management IPO likely to have boosted cash in-hand for some banks and mutual funds, dealers said.  

 

Monday's surplus liquidity likely reduced to less than INR 500 billion including funds from the seven-day VRR, with GST payments having started Monday, dealers said. The central bank took all INR-720.51-billion bids at the seven-day VRR for INR 1.25 trillion Monday. The RBI has inquired about favoured tenures and sizes of VRRs to come, dealers said. Most dealers were expecting a two to three-day operation of between INR 500 billion and INR 750 billion for Tuesday. With heavy intervention from the central bank in the foreign exchange spot market and no major inflows for the next 10 sessions, traders expect the RBI to continue to hold VRRs this month. 

Some banks have received inflows from foreign currency non-resident bank deposits which is aiding liquidity internally, but does not reflect in the liquidity figure, dealers said. The RBI Monday said banks have raised FCNR(B) deposits to the tune of $17.4 billion since Jun. 8.

 

"Liquidity is neck-to-neck, we have GST outflows today (Monday)," a dealer at a private sector bank said. "We can see call open at 5.45% tomorrow (Tuesday)."

 

The one-day call money rate ended at 5.30% Monday, up from 4.75% at two-day close Saturday. The weighted average call rate was 5.34%, up from 4.94% Saturday. The volume in the market was INR 156.85 billion Monday, much higher than INR 9.08 billion Saturday. The one-day tri-party repo rate ended at 5.04%, up from 5.00% for two-day loans Saturday. The weighted average rate was 5.25%, higher than the previous day's 4.41%. The volume in the TREPS market was INR 4.69 trillion, higher than INR 161.11 billion in the previous session.

 

OUTLOOK

On Tuesday, the one-day interbank call money rate is seen above the RBI's repo rate of 5.25% and closer to the RBI's MSF rate of 5.50% due to outflows for goods and service tax payments, dealers said. Traders will also assess the drain on rupee liquidity due to the RBI's dollar sales in the foreign exchange spot market. The RBI likely intervened by selling about $2 billion Monday, according to dealers in the foreign exchange market. The RBI will conduct a three-day VRR Tuesday for INR 750 billion, which is what several traders were expecting. Traders expect the RBI to continue to hold VRRs until the Centre's month-end expenditure begins, with the systemic liquidity seen falling into a deficit this week.

 

"Liquidity can fall into a deficit tomorrow (Tuesday), so RBI will have to keep conducting VRRs until month-end inflows begin," a dealer at a state-owned bank said. 

 

Dealers expect the call rate at 4.60–5.50% Tuesday. The tri-party repo rate is expected to be in the 4.60–5.70?nd. The weighted average call rate is expected to be in the 5.25–5.35?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

5.40%--Monday open for one-day loans

4.75%--Saturday close for two-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.39	5.44
3-day	--	--
14-day	5.81	5.78
1-month	6.06	6.05
3-month	6.59	6.58

 

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India Call: Near RBI's SDF rate; tri-party repo rate up on demand for funds

 

MUMBAI – The interbank call money rate for one-day loans was near the Reserve Bank of India's Standing Deposit Facility rate of 5% as early demand for funds eased, dealers said. However, the tri-party repo rate remained above the RBI's repo rate of 5.25% as the refund of a large amount of funds locked in the initial public offering of SBI Fund Management is yet to happen, dealers said. 

 

"SBI FM (Fund Management) IPO refund is yet to happen. Institutional side, the IPO was subscribed some 144 times, so funds are locked there and so rates are higher in TREPS market," a dealer at a private sector bank said. "The refund will be done by end of today (Monday), then rates will ease," the dealer said. 

 

The portion reserved for qualified institutional buyers at the initial public offering of SBI Funds Management was subscribed over 140 times, with bids placed for 4.33 billion shares against 30.93 million shares on offer. This aggressive demand from institutional participants led to lower funds available with mutual funds and banks, keeping the rates in the tri-party repo market closer to the RBI's Marginal Standing Facility rate of 5.50%. 

 

At 1351 IST, the one-day call rate was at 5.10%, lower than 5.40% at open but higher than 4.75% at Saturday close for two-day loans. The weighted average call rate was 5.37%, up from 4.94% Saturday. The volume at the same time was INR 111.28 billion, compared with INR 187.65 billion at 1330 IST Friday and INR 1.26 billion at 1330 IST Saturday.

 

At 1351 IST, the one-day tri-party rate was 5.34%, sharply higher than 5.25% at opening and 5.00% for two-day loans Saturday. The weighted average rate was 5.30%, also up from 4.41% Saturday. The volume in the tri-party market at the same time was INR 3.60 trillion, compared with INR 3.79 trillion at 1330 IST Friday and INR 122.98 billion at 1330 IST Saturday.

 

Low liquidity surplus in the banking system also added to the existing pressure on overnight rates, dealers said. The RBI's net liquidity absorbed, which is a proxy for banking system liquidity surplus, was INR 844.20 billion Sunday, compared to INR 829.00 billion Saturday and INR 708.88 billion Friday, according to the latest data. Banks reduced their cash balances with the RBI to INR 8.33 trillion Sunday from INR 8.35 trillion Saturday and INR 8.67 trillion Friday, leading to the rise in the surplus, dealers said. 

 

Some dealers expect the liquidity to turn into a deficit by the end of this week due to ongoing outflows of INR 1.8 trillion for GST payments. Although the seven-day variable rate repo auction for INR 1.25 trillion saw moderate subscription, dealers expect the RBI to conduct more VRR auctions for shorter tenure this week to support the banking system's liquidity. The RBI took all INR 720.51 billion bids at the auction.   

 

Dealers said the auction was not fully subscribed as rates in the tri-party repo market were below the cut-off rate of 5.26%. However, following the result of the auction, the tri-party repo rate rose above 5.25% and the majority of the borrowing was also done after the auction, they said.  

 

Market participants expect the weighted average call money rate to be at 5.35–5.40% for Monday and the weighted average tri-party repo rate at 5.34-5.40%.  (J. Navya Sruthi)

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India Call: Above RBI's repo rate on low liquidity surplus, GST outflows

 

MUMBAI – The one-day interbank call rate was above the Reserve Bank of India's repo rate of 5.25% due to early demand for funds from primary dealerships, dealers said. Low banking system liquidity and demand for funds to meet goods and services tax outflows scheduled for Monday and Tuesday also kept rates on the higher side of the Liquidity Adjustment Facility corridor, dealers said. 

 

At 0950 IST, the one-day call rate was at 5.40%, sharply higher than 4.75% for two-day loans Saturday. The weighted average call rate was 5.40%, up from 4.94% Saturday. The volume at the same time was INR 39.66 billion, compared with INR 43.27 billion at 0930 IST Friday and INR 540 million at 1130 IST Saturday.

 

At 0950 IST, the tri-party repo rate for one-day loans was at 5.25%, sharply higher than 5.00% for two-day loans Saturday. The weighted average rate was 5.25%, also up from 4.41% Saturday. The volume in the tri-party market at the same time was INR 1.61 trillion, compared with INR 789.73 billion at 0930 IST Friday and INR 92 million at 0945 IST Saturday.

 

The RBI conducted a seven-day variable rate repo auction for a notified amount of INR 1.25 trillion due to low liquidity in the banking system. The RBI's net liquidity absorbed, which is a proxy for banking system liquidity surplus, was INR 708.88 billion Friday, down from INR 831.96 billion Thursday, according to the latest data. Banks increased their cash balances with the RBI to INR 8.67 trillion Friday from INR 8.11 trillion Thursday, leading to the fall in the surplus, dealers said. 

 

The median of an Informist poll showed an expectation of INR 637.50 billion at a cut-off rate of 5.26% at the seven-day VRR auction for INR 1.25 trillion. Estimates for total accepted bids were between INR 200 billion and INR 1.25 trillion at the auction, according to the poll. Most dealers expect the auction to be poorly subscribed as it is for longer tenure. A few dealers, on the other hand, said the auction is likely to be fully subscribed due to low liquidity in the banking system and outflows of around INR 1.8 trillion for GST payments.  

 

"Seven-day is long term, so mostly it will be under subscribed...RBI could get another VRR definitely, if not today (Monday), then tomorrow (Tuesday) we can see one as liquidity is likely to be lower," a dealer at a state-owned bank said. The dealer expects the central bank to conduct a shorter-tenure VRR auction due to outflows for GST payments.  

 

Dealers expect overnight rates to rise if the seven-day VRR auction for INR 1.25 trillion is poorly subscribed. However, some dealers do not expect a second VRR Monday, as the central bank usually conducts a second such auction only if the first is fully subscribed or oversubscribed.  (J. Navya Sruthi)

 

End

 

US$1 = INR 96.4450

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

 

With inputs from Pratiksha

Edited by Akul Nishant Akhoury

 

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