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Informist, Thursday, Jul. 30, 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% amid demand for funds from banks for month-end credit disbursements and fortnight-ending reserve requirements, dealers said. Rates in the tri-party repo market rose near the RBI's Marginal Standing Facility rate of 5.50% during the session as mutual funds faced month-end redemptions, dealers said. Additionally, the RBI also did not conduct a variable rate repo auction Thursday in spite of the reversal of two operations totalling INR 637.40 billion, adding to upward pressure on rates. The rise in rates was despite the liquidity surplus improving. Some dealers said the Centre's month-end expenditure begun Wednesday and Thursday. 

Mutual funds faced redemptions nearing the end of the month, dealers said. Banks had drawn down cash balances parked with the RBI, to INR 7.91 trillion Wednesday, from INR 8.00 trillion Tuesday, and lower than the average requirement of INR 8.16 trillion for the fortnight ending Friday. Some banks borrowed to fulfil this requirement, while others borrowed for credit disbursements, dealers said. Some inflows from the Centre's expenditure on salaries and pensions began Wednesday, while inflows from foreign currency non-resident bank deposits which were swapped with the RBI Tuesday likely entered the banking system Thursday, dealers said.

"I think rates will be elevated tomorrow (Friday) again because of the month-end pressure," a dealer at a state-owned bank said. "The RBI will have to come up with a VRR of around 75,000 (INR 750 billion)."

The one-day call money rate ended at 5.29% Thursday, up from Wednesday's close of 5.25% for one-day loans. The weighted average call rate was 5.29%, inching lower from 5.30% Wednesday. Market volume was INR 146.32 billion Thursday, down from INR 180 billion in the previous session. The one-day tri-party repo rate ended at 5.05%, up from 4.80% for one-day loans Wednesday, hitting a day's high of 5.48%. The weighted average rate was 5.27%, up from the previous day's 5.14%. The volume in the TREPS market was INR 4.83 trillion, the same as the previous session.

OUTLOOK

On Friday, the three-day interbank call money rate is seen above the RBI's repo rate of 5.25% on the last day of the month for credit disbursements and the RBI-mandated reporting fortnight, dealers said, especially if the RBI does not conduct a variable rate repo auction. However, surplus liquidity may increase due to inflows from the Centre's expenditure and foreign currency non-resident bank deposits, dealers said. Traders will also assess the drain on rupee liquidity due to the RBI's dollar sales in the foreign exchange spot market.

Dealers expect the call rate at 4.60–5.45% Friday. The tri-party repo rate is expected to be in the 4.60–5.25% band. The weighted average call rate is expected to be in the 5.25–5.40% band, and that in the tri-party repo market is likely to be in the 5.10–5.30% band, they said.

CALL RATE

5.29%--Thursday close for one-day loans

5.35%--Thursday open for one-day loans

5.25%--Wednesday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: At SDF rate; tri-party repo near MSF on bks' demand for funds

MUMBAI – The one-day interbank call money rate was at the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Thursday as primary dealers met their demand for funds and banks tapped the tri-party repo market for their cash needs, dealers said. This pushed up the tri-party repo rate to near the Marginal Standing Facility rate of 5.50% intraday, especially with some mutual funds also facing redemptions at the month-end, they said. 

Demand for funds in money markets was higher as the central bank chose not to roll over two variable rate repo auctions worth INR 627 billion which matured Thursday. Banks also had increased credit offtake near the month-end and were looking to maintain higher cash buffers, pushing up borrowing needs with surplus liquidity in the banking system comfortable, but limited, dealers said.

"The rates are high due to mutual funds facing a redemption, maybe they don't want to lend," a dealer at a public sector bank said. "The liquidity will ease after 31st (Friday, Jul. 31) due to inflows into the system, it might go up to INR 1.35 trillion-INR 1.45 trillion in the coming week." The government's month-end spending is expected to cool rates, with some pegging the RBI's net liquidity injected – a proxy for the systemic liquidity surplus – to rise to as much as INR 2.00 trillion next week from INR 1.16 trillion Wednesday. 

At 1530 IST, the one-day call rate was 5.00%, down from 5.35% at the open and from 5.25% at Wednesday's close. The weighted average call rate was 5.31%, up from 5.30% Wednesday. The volume in the call money market at 1530 IST was INR 131.86 billion, compared with INR 153.62 billion at the same time Wednesday. 

At 1530 IST, the tri-party repo rate for one-day loans was 5.40%, higher than 5.20% at the open and 4.80% Wednesday. It hit a high of 5.48% intraday. The weighted average rate was 5.27%, compared to 5.14% Wednesday. The volume in the tri-party market at 1530 IST was INR 4.59 trillion, compared with INR 4.66 trillion at 1540 IST Wednesday.

"RBI should have conducted a VRR auction today since the liquidity is tight," said the dealer quoted earlier. (Adithi Nemani and Aaryan Khanna)

India Call: Above repo on early demand, seen down on comfortable liquidity

MUMBAI – The one-day interbank call money 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. However, the tri-party repo rate for one-day loans was slightly below the RBI's policy rate as liquidity surplus rose. Some dealers said the government's month-end spending for salaries and pensions has started, which is likely to keep overnight rates below the policy rate. 

At 0957 IST, the one-day call rate was 5.35%, against 5.25% Wednesday. The weighted average call rate was 5.35%, higher than 5.30% Wednesday. The volume at the same time was INR 34.22 billion, compared with INR 13.47 billion at 0930 IST Wednesday.

At 0957 IST, the tri-party repo rate for one-day loans was 5.24%, higher than 4.80% Wednesday. The weighted average rate was 5.23%, compared to 5.14% Wednesday. The volume in the tri-party market at the same time was INR 2.54 trillion, compared with INR 1.23 trillion at 0930 IST Wednesday.

"Earlier, the spread between call and TREPs (tri-party repo rate) would be 25 bps (basis points) but now it is 15...(although) it (call rate) is above repo but in line with TREPs," a dealer at a small-finance bank said. "RBI wants call to be at repo, even if it is above (policy rate) now during the day it will be cool down as we had VRR yesterday (Wednesday) and liquidity improved," the dealer said.

The RBI's net liquidity absorbed – a proxy for the systemic liquidity surplus – was INR 1.16 trillion Wednesday, up from INR 1.07 trillion Tuesday as banks reduced cash balances with the RBI, dealers said. Cash balances parked with the RBI Wednesday were at INR 7.91 trillion, down from INR 8.00 trillion Tuesday.

Wednesday, the central bank conducted an overnight variable rate repo auction for INR 500 billion at which it received INR 566.20 billion bids and took INR 500.20 billion. A few dealers expect the RBI to conduct a three-day VRR auction Friday amid demand for funds from some banks for fortnight and month-end requirements. The average daily cash reserve requirement for the fortnight ending Friday is INR 8.16 trillion, while banks maintained only INR 7.91 trillion as on Wednesday.  

Dealers do not expect the call rate to rise near the RBI's Marginal Standing Facility rate of 5.50%. They expect the weighted average call rate to be around 5.30%. They expect the weighted average tri-party repo rate to be similar to the level on Wednesday.  (J. Navya Sruthi)

End

US$1 = INR 95.6800

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

Edited by Akul Nishant Akhoury

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