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Informist, Monday, Aug. 3, 2026

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate ended below the Reserve Bank of India's repo rate of 5.25%, but above Saturday's close. The weighted average call rate ended at its lowest since early May — barring Saturdays — as the liquidity surplus in the banking system over the weekend rose to its highest since mid-May on the back of the Centre's expenditure for salaries and pension payouts, and inflows through foreign currency non-resident dollar-denominated bank deposits, dealers said. The liquidity surplus is seen staying at current levels, with expectations of the RBI conducting a variable-rate reverse repo operation rising. The RBI has not conducted a VRRR since Apr. 17. 

 

The liquidity surplus in the banking system is likely to stay comfortably above INR 1.50 trillion at least until outflows for goods and services tax begin near the end of the month, dealers said. Outflows for tax deducted at source due in the next few days are unlikely to put upward pressure on rates, dealers said. Funds available in hand also improved after the release of funds locked up in initial public offerings last week, they said.

 

"Liquidity will sustain at these levels, until GST starts maybe," a dealer at a private sector bank said. "Tomorrow (Tuesday) or the day after tomorrow, the RBI could start VRRRs." If the weighted average tri-party and call money rates are continuously near or below the SDF rate, the RBI could begin VRRRs, dealers said.

 

Banks have received inflows worth $36.73 billion through the RBI's concessional swap facility on foreign currency non-resident bank deposits till Friday from Jun. 8, the latest data released by the RBI on Saturday showed, while data released by the finance ministry Monday showed banks' outstanding FCNR(B) deposits rose by $28 billion between Jun. 5 and Thursday. This suggests a roll-over or re-booking of about $9 billion of these deposits, dealers said. Despite the re-booked amount, the pace of inflows is healthy and on track to beat estimates of $40 billion to $50 billion, dealers said. Some traders expect such deposits to cross $70 billion by the end of September, since the last time this scheme was rolled out in 2013, the pace of inflows had picked up near the end of the swap window tenure, they said. 

 

"The FCNR money is supporting. We are watching for the RBI's intervention in the rupee (which drains rupee liquidity), but now if crude oil (price) comes down then we will see less of that too," a dealer at a state-owned bank said. 

 

The one-day call money rate ended at 5.10% Monday, up from Saturday's close of 4.85% for two-day loans. The weighted average call rate was 5.10%, up from 4.95% Saturday. Market volume was INR 140.41 billion Monday, sharply up from INR 13.66 billion in the previous session. The one-day tri-party repo rate ended at 5.00%, up from 4.63% for two-day loans Saturday. The weighted average rate was 4.94%, tad higher than the previous day's 4.84%. The volume in the TREPS market was INR 4.67 trillion, much higher than INR 95.34 billion the previous session.

 

OUTLOOK

On Tuesday, the one-day interbank call money rate is seen below the RBI's repo rate of 5.25% on low demand for funds amid lack of major outflows, dealers said. Surplus liquidity is seen as comfortable due to inflows from the Centre's expenditure for salaries and pensions, and inflows into foreign currency non-resident bank deposits, dealers said. Dealers expect the call rate at 4.60–5.25% Tuesday. The tri-party repo rate is also expected to be in the 4.60–5.20?nd. The weighted average call rate is expected to be in the 5.00–5.25?nd, and that in the tri-party repo market is likely to be in a 4.60-5.15% range, they said.

 

CALL RATE

5.10%--Monday close for one-day loans

5.15%--Monday open for one-day loans

4.85%--Saturday close for two-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.14	5.41
3-day	--	--
14-day	5.79	5.80
1-month	6.09	6.09
3-month	6.61	6.64

 

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India Call: Below RBI SDF rate on weak fund demand amid surplus liquidity

 

MUMBAI – The one-day interbank call money rate was below the Reserve Bank of India's Standing Deposit Facility rate of 5.0% due to low demand for funds, dealers said. The tri-party repo rate ended at the Standing Deposit Facility rate as the liquidity surplus rose sharply due to inflows through foreign currency non-resident bank deposits and the government's month-end spending for salaries and pensions. 

 

At 1606 IST, the one-day call rate was at 4.90%, up from 4.85% on Saturday for two-day loans. The weighted average call rate was 5.11%, up from 4.95% on Saturday. The trade volume in the call money market was at INR 128.59 billion, against INR 6.70 billion Saturday at 1530 IST and INR 129.80 billion at 1530 IST Friday. Usually, overnight rates and volumes in the market remain low on Saturdays as most banks borrow funds for weekend requirements on Friday.   

 

At 1600 IST, the tri-party repo rate for one-day loans ended at 5.00%, up from 4.63% for two-day loans on Saturday. The weighted average rate was 4.94%, up from 4.84% Saturday. The volume in the broader tri-party repo market at the same time was INR 4.67 trillion, against INR 95.34 billion at 1600 IST Saturday and INR 4.73 trillion at 1600 IST Friday.

 

The net liquidity absorbed by the RBI – proxy for liquidity surplus – was at INR 1.93 trillion on Sunday, against INR 1.91 trillion Saturday and INR 2.33 trillion Friday. The liquidity surplus on Friday was the highest since May 15 on the back of inflows from the government's month-end spending and inflows from foreign currency non-resident bank deposits. However, liquidity fell over the weekend as banks increased their cash balance with the RBI, dealers said. The cash balances with the RBI rose to INR 9.04 trillion on Sunday and INR 9.05 trillion on Saturday from INR 8.26 trillion Friday.  

Although the liquidity surplus rose to almost 1% of the net demand and time liabilities, most dealers do not expect any measures by the RBI for liquidity withdrawal. "There are very little chances, but if the RBI announces a VRRR (variable rate reverse repo) now, then its purpose to support the banking system with liquidity through earlier measures would be diluted," a dealer at a private sector bank said. 

 

Dealers expect the rates and liquidity to remain at the current range because of the lack of major outflows. They expect the liquidity to remain at a comfortable level even after outflows of around INR 500 billion for excise duty and tax deducted at source due Friday.  

 

Banks received $36.73 billion of inflows from FCNR(B) deposits as of Friday, the central bank said in a release Saturday. The total foreign capital inflows through the measures announced by the RBI on Jun. 5 were at $40.82 billion from Jun. 8 till Friday.   

 

By the end of September, when the window for foreign deposits under this scheme closes, market participants expect the total FCNR(B) deposits will be above $80 billion. Dealers expect the central bank to announce VRRR only if systemic liquidity rises to INR 3 trillion to INR 3.5 trillion. 

 

Dealers expect the RBI's Monetary Policy Committee to maintain a neutral stance and tone in the policy on Wednesday. They do not expect any major liquidity measures or hawkish comments in the policy.  (J. Navya Sruthi)

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India Call: Below RBI's repo rate as liquidity surplus highest since May 15

 

MUMBAI – The one-day interbank call money rate was below the Reserve Bank of India's policy rate of 5.25% as the banking system liquidity rose to the highest level since May 15. The tri-party repo rate was at the central bank's Standing Deposit Rate of 5.00% due to low demand for funds, dealers said. 

 

Dealers expect the call money rate to remain in the lower end of the Liquidity Adjustment Facility for Monday. They also expect the liquidity surplus to remain stable for the current week.  

 

At 0940 IST, the one-day call rate was at 5.15%, up from 4.85% Saturday for two-day loans. The weighted average call rate was 5.15%, also up from 4.95% Saturday. The trade volume in the call money market was at INR 24.05 billion, against INR 100 million Saturday at 1030 IST and INR 34.68 billion at 0930 IST Friday. Usually, overnight rates and volumes in the market remain low on Saturday as most banks borrow funds for weekend requirements on Friday.   

 

At 0940 IST, the tri-party repo rate for one-day loans was at 5.00%, up from 4.63% for two-day loans Saturday. The weighted average rate was 5.02%, up from 4.84% Saturday. The volume in the broader tri-party repo market at the same time was INR 1.51 trillion, against INR 3 billion at 0935 IST Saturday and INR 1.03 trillion at 0930 IST Friday.

 

The net liquidity absorbed by the RBI – the proxy for liquidity surplus – rose to INR 2.33 trillion Friday, the highest level since May 15 and sharply up from INR 1.30 trillion Thursday. This was on the back of inflows from the government's month-end spending for salaries and pensions and foreign currency non-resident bank deposits.

 

"Liquidity is the highest in a long time now... so rates are likely to remain subdued today (Monday)," a dealer at a private sector bank said. "FCNR(B) flows are improving. HSBC alone got some $8 billion flows (through FCNR(B) deposits). Earlier, there was no impact of these flows, but now it has started showing up in liquidity as the RBI may not have put so much in the forward book," the dealer said. 

 

Banks received $36.73 billion in inflows from FCNR(B) deposits as of Friday since Jun. 8, the central bank said in a release Saturday. The total foreign capital inflows through the measures announced by the RBI on Jun. 5 were at $40.82 billion from Jun. 8 till Friday.   

 

Dealers expect the weighted average call rate to be at 4.90-5.10% by the end of Monday. They expect the weighted average tri-party repo rate near the RBI's Standing Deposit Facility of 5%.  (J. Navya Sruthi)

 

End

 

US$1 = INR 95.3375

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

 

Edited by Saji George Titus

 

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