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Informist, Tuesday, Jul. 21, 2026

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate closed above the Reserve Bank of India's repo rate for the second consecutive session amid outflows for goods and services tax payments, dealers said. Systemic liquidity failed to reflect over $20 billion of foreign inflows seen till Friday from Jun. 8, but nonetheless, traders expect such inflows to continue to be robust and aid liquidity, dealers said.

 

Outflows of over INR 500 billion took place Tuesday for GST payments, dealers said. Banks' funds parked with the RBI under the Standing Deposit Facility are likely to come down overnight, they said. Funds parked under SDF Monday were INR 1.54 trillion, down from INR 1.60 trillion Sunday. "We've seen a thousand crore (INR 10 billion) outflow from our bank today (Tuesday)," a dealer at a state-owned bank said.  

 

The RBI's three-day variable rate repo auction was only subscribed at nearly 50% of the notified size as banks had sufficient funds after borrowing at the seven-day VRR held Monday, dealers said. Traders were puzzled after data released by the RBI Monday showed foreign inflows received through the RBI's various foreign exchange schemes were $20.72 billion till Friday from Jun. 8, translating to nearly INR 2 trillion in rupee liquidity, since systemic liquidity has been at an average of INR 835 billion surplus in the same period. Most of these flows have been eroded by the RBI's foreign exchange management operations, dealers said.

 

"We're in the sowing season for paddy, etc. so we've possibly seen some CIC (currency in circulation) leakage also, which is affecting liquidity along with RBI's intervention, but all this data comes with a lag so its speculation," a dealer at a primary dealership said. For the week ended Jul. 10, the value of banknotes in circulation was INR 42.63 trillion, inching higher from INR 42.55 trillion in the week ended Jul. 3.

 

However, the $20.72-billion figure is far above traders' expectations of roughly $10 billion, and expectations of robust inflows accelerated post the data release. Traders expect flows totalling around $40 billion by the first week of August.  

 

The one-day call money rate ended at 5.35% Tuesday, up from 5.30% at close Monday. The weighted average call rate was 5.35%, inching higher from 5.34% Monday. The volume in the market was INR 198.65 billion Tuesday, higher than INR 165.46 billion the previous session. The one-day tri-party repo rate ended at 4.98%, lower than 5.04% Monday. The weighted average rate was 5.23%, inching lower from the previous day's 5.25%. The volume in the TREPS market was INR 4.53 trillion, lower than INR 4.72 trillion in the previous session.

 

OUTLOOK

On Wednesday, the one-day interbank call money rate is seen above the RBI's repo rate of 5.25% amid 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. 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. Dealers expect the call rate at 4.60–5.40% Wednesday. The tri-party repo rate is expected to be in the 4.60–5.30?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 5.10–5.27?nd, they said.

 

CALL RATE

5.35%--Tuesday close for one-day loans

5.40%--Tuesday open for one-day loans

5.30%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

The overnight Mumbai Interbank Outright Rate has not been set below the repo rate since May 18. Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	MONDAY
Overnight	5.39	5.39
3-day	--	--
14-day	5.81	5.81
1-month	6.07	6.06
3-month	6.60	6.59

 

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India Call: Slips below SDF rate; weighted avg high as GST outflows continue

 

NEW DELHI – The one-day interbank call money rate slipped below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as early demand for funds from primary dealers subsided, even as the weighted average rate remained high, dealers said. Banks did not participate in the RBI's three-day variable rate repo auction as they did not want to borrow for that long a tenure, even as demand for funds overnight was high amid goods and services tax outflows, they said. 

 

The RBI got bids worth only INR 342.91 billion at its three-day, INR 750-billion VRR auction held at 0930-1000 IST and accepted all of them at a 5.26% cut-off. With banks choosing to tap the overnight markets, the weighted average call rate was well above the repo rate and even the weighted average tri-party repo rate was near the policy rate of 5.25%, dealers said. 

 

At 1430 IST, the one-day call rate was at 4.60%, lower than 5.40% at open and also down from 5.30% at Monday's close. The weighted average call rate was 5.37%, up from 5.34% Monday. The traded volume of the one-day contract was INR 111.28 billion, compared with INR 131.62 billion at the same time Monday.

 

At 1430 IST, the one-day tri-party rate was 5.17%, down from 5.25% at the open but lower than 5.04% at close Monday. The weighted average rate was 5.24%, similar to 5.25% Monday. The volume in the tri-party market was INR 3.75 trillion, compared with INR 3.87 trillion at the same time Monday. Banks are largely relying on this market to meet its funding needs amid the monthly GST outflows, dealers said. 

 

"Even some PSU banks (state-owned banks) are on the borrowing side today (Tuesday) since GST is ongoing," a dealer at private sector bank said. "My sense is around INR 800 billion-INR 1 trillion of outflow is happening today, so there is quite a lot of pressure that is being met through TREPS."

 

The banking system is likely to see a total outflow of INR 1.80 trillion for GST payments to the government. The bulk of the outflows will take place Tuesday, dealers said. Some payments on Monday already reduced the liquidity available with banks. The RBI's net liquidity absorbed, which is a proxy for banking system liquidity surplus, was INR 695.96 billion on Monday, down from INR 844.20 billion Sunday. Liquidity with banks fell even as they drove down cash balances with the RBI to maintain buffers Monday, dealers said.  (Aaryan Khanna)

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India Call: Up, near RBI's MSF rate on low liquidity surplus, GST outflows

 

MUMBAI – The one-day interbank call money rate was up, near the Reserve Bank of India's Marginal Standing Facility rate of 5.50% Tuesday due to low liquidity surplus in the banking system and demand for funds amid outflows for goods and services tax payments, dealers said. The tri-party repo rate was slightly above the policy rate of 5.25% as some banks were borrowing ahead of GST outflows scheduled for Tuesday, they said.  

 

The RBI's net liquidity absorbed, which is a proxy for banking system liquidity surplus, was INR 695.96 billion on Monday, down from INR 844.20 billion Sunday due to some outflows for GST payments, dealers said. Banks reduced their cash balances with the RBI to INR 8.19 trillion Monday from INR 8.33 trillion Sunday. The average daily cash reserve requirement for the fortnight ending Jul. 31 is INR 8.16 trillion. 

 

Dealers expect outflows for GST payments to continue Tuesday. "Around 80,000 crore (INR 800 billion) outflows (for GST payments) are scheduled today (Tuesday)," a dealer at a state-owned bank said. Some dealers expect liquidity to turn into deficit by the end of this week after the outflows for GST payments.    

 

At 0951 IST, the one-day call rate was 5.40%, higher than 5.30% Monday. The weighted average call rate was 5.40%, up from 5.34% Monday. The volume at the same time was INR 51.63 billion, compared with INR 15.37 billion at 0930 IST Monday.

 

At 0951 IST, the tri-party repo rate for one-day loans was 5.28%, sharply higher than 5.04% Monday. The weighted average rate was 5.27%, up from 5.25% Monday. The volume in the tri-party market at the same time was INR 1.30 trillion, compared with INR 1.27 trillion at 0930 IST Monday.

Dealers expect overnight rates to cool down amid the three-day variable repo rate auction for INR 750 billion conducted between 0930 IST and 1000 IST to support the banking system's liquidity. The median in an Informist poll showed an expectation of INR 450 billion at a cut-off rate of 5.26% at the auction. Estimates for total accepted bids at the auction were between INR 300 billion and INR 750 billion, according to the poll. The central bank conducted a seven-day VRR auction for INR 1.25 trillion Monday, at which it took all INR 720.51 billion of bids.

 

Some dealers expect poor participation at the auction as the borrowing rate in the tri-party repo market is still at a comfortable level. "Already 80,000 crore (INR 800 billion) volume is done in the TREPS (tri-party repo) market and rates are also comfortable..., so can't see good subscription at the auction," a dealer at a foreign bank said.  (J. Navya Sruthi)

 

End

 

US$1 = INR 96.23

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

 

Edited by Deepshikha Bhardwaj

 

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