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Informist, Friday, Aug. 21, 2026

 

By Aaryan Khanna

 

NEW DELHI – The three-day interbank call money rate ended near the Reserve Bank of India's repo rate of 5.25% on Friday due to late demand for funds from banks after goods and services tax outflows and before the weekend, dealers said. However, a large liquidity surplus in the banking system and inflows from foreign currency non-resident (banks) deposits kept overnight rates in check, they said. 

 

The three-day call rate ended at 5.20% Friday, unchanged from Thursday's close for one-day loans and down from 5.25% at the open. The weighted average call rate was 5.19%, slightly higher than 5.16% Thursday. The trade volume in the contract was INR 132.84 billion, lower than INR 156.77 billion in the one-day contract Thursday.

 

The three-day tri-party repo rate closed at 5.00% Friday, down from 5.10% at open from 5.05% at Thursday's close on the one-day contract. The weighted average rate was 5.07%, against 5.05% Thursday. The volume of the contract was INR 4.53 trillion, rising slightly from INR 4.42 trillion Thursday. Some mutual funds have faced redemptions over the past two days, which has slightly raised the tri-party repo rate, dealers said.

 

GST outflows since Thursday have totalled INR 1.5 trillion to INR 1.8 trillion, according to estimates from market participants. While these have drained cash from the banking system and increased demand for funds from banks in the call market, the impact has been lower than prior months due to a sizeable liquidity surplus of over 1% of banks' net demand and time liabilities, dealers said.

 

The net liquidity absorbed by the RBI--a proxy for liquidity surplus--was at INR 3.50 trillion Thursday. At the same time, banks lent funds to primary dealers only at the repo rate of 5.25% in early trade, higher than the rest of this week, dealers said.  

 

"Maybe some of the private (sector) banks were facing an issue. PSU (public sector undertaking) banks were on the lending side since morning," a dealer at a state-owned bank said. "Because there is liquidity in the system, we have not seen the usual kind of stress that we see from GST outflows after many months, maybe years."

 

In spite of the GST outflows, banks also participated in the variable rate reverse repo auction that the RBI held Friday. The RBI accepted all offers worth INR 959.70 billion at the three-day, INR-1.50-trillion VRRR tender at a cut-off of 5.24%. Two overnight VRRRs worth INR 1.50 trillion matured Friday, which contributed to the subscription, dealers said.

 

OUTLOOK

Money markets are shut Saturday. On Monday, the one-day interbank call money rate is expected to open near the RBI's repo rate of 5.25% due to early demand for funds from primary dealers. The liquidity drain from GST outflows since Thursday may limit lending appetite and reduce the subscription at the VRRR auction Monday, dealers said.

 

The RBI will conduct a seven-day VRRR auction for INR 2.50 trillion at 0930-1000 IST Monday. While banks may go into the auction with limited liquidity, the subscription may be significant as traders expect significant inflows into banking system liquidity in the last week of August, dealers said. FCNR(B) deposit accretion is set to surge before the RBI's special scheme for these deposits ends on Aug. 31, while government spending will also add to cash with banks, they said.

 

Dealers expect the one-day call rate at 4.60–5.30% Monday. The one-day tri-party repo rate is expected to be in the 4.50–5.25?nd. The weighted average call rate is expected to be in the 5.05–5.20?nd, and the tri-party repo rate is likely to be 4.90-5.20%, dealers said.

 

CALL RATE

5.20%--Friday close for three-day loans

5.25%--Friday open for three-day loans

5.20%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.23	5.19
3-day	--	--
14-day	5.83	5.83
1-month	6.07	6.06
3-month	6.54	6.54

 

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India Call: Below SDF rate; GST outflows keep weighted avg rate near repo

 

NEW DELHI – The three-day interbank call money rate fell below the Reserve Bank of India's Standing Deposit Facility rate of 5.00?ter primary dealers met their early demand for funds, dealers said. Even though goods and services tax outflows kept the weighted average call rate near the policy repo rate of 5.25%, banks were sitting on ample cash balances and the variable rate reverse repo auction saw healthy subscription. 

 

The RBI accepted all offers worth INR 959.70 billion at the three-day, INR-1.50-trillion VRRR tender Friday at a cut-off of 5.24%. Two overnight VRRRs worth INR 1.50 trillion matured Friday, which contributed to the subscription, dealers said. The net liquidity absorbed by the RBI--a proxy for liquidity surplus--fell to INR 3.50 trillion Thursday from INR 3.71 trillion Wednesday. The fall was less than the total outflows of around INR 700 billion for GST outflows that took place Thursday, likely due to banks receiving inflows through foreign currency non-resident (banks) deposits, dealers said. 

 

"Because of GST outflows, the banks were lending at a slightly higher rate in the morning," a dealer at a primary dealership said. "Now the rates have calmed down again as the liquidity is quite steady. Banks are being very aggressive on FCNR(B) deposits, so we should see a daily rise in liquidity until first week of September." The RBI's special scheme offers a zero-hedging-cost swap window until Sept. 11 for three-to-five year FCNR(B) deposits raised until Aug. 31, according to the central bank's revised timeline.

 

At 1530 IST, the three-day call rate was 4.90%, down from 5.25% at Friday's open and 5.20% at Thursday's close for one-day loans. The weighted average call rate was 5.21%, up from 5.16% Thursday. The trade volume in the contract was INR 105.02 billion, similar to INR 109.64 billion at the same time Thursday.

 

At 1530 IST, the three-day tri-party repo rate was 5.03%, down from 5.10% at open and similar to 5.05% at Thursday's close on the one-day contract. The weighted average rate was 5.08%, against 5.05% Thursday. The volume in the contract was INR 4.28 trillion, up from INR 4.08 trillion Thursday. Some mutual funds have faced redemptions over the past two days, which has slightly raised the tri-party repo rate, dealers said.  (Aaryan Khanna)

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India Call: At repo rate; VRRR sees firm subscription despite GST outflows

 

MUMBAI – The three-day interbank call money rate was at the Reserve Bank of India's repo rate Friday amid outflows for goods and services tax payments, dealers said. The three-day tri-party repo rate also inched higher, but remained below the repo rate. A major chunk of the INR-1.80-trillion outflows for the tax payments are due Friday, dealers said. Inspite of this, the three-day variable rate reverse repo auction of INR 1.50 trillion saw robust subscription, with a few traders expecting a second operation Friday. The RBI took all offers worth INR 959.70 billion at the auction. "Around one lakh crore I'm expecting to go (for tax payments) today (Friday), but I don't see rates going above this" a dealer at a private sector bank said. Some mutual funds also faced redemptions, dealers said. "One of the investors has pulled out of funds," a dealer at a mutual fund said. Demand for funds to provide for funding requirements over the weekend also pushed up money market rates, dealers said. The weighted average call money rate could end at its highest since end of July if rates stay at current levels. 

 

At 1030 IST, the three-day call rate was at 5.25%, against 5.20% at Thursday's close for one-day loans. The weighted average call rate was 5.24%, up from 5.16% Thursday. The trade volume on the same contract was INR 34.90 billion at 1030 IST from INR 50.37 billion at 1030 IST Thursday. At 1030 IST, the three-day tri-party repo rate was 5.17%, against 5.05% at Thursday's close for one-day loans. The weighted average rate was 5.08% against 5.05% on Thursday. The volume on the same contract was INR 2.47 trillion at 1030 IST, against INR 2.40 trillion at the same time Thursday. The net liquidity absorbed by the RBI--a proxy for liquidity surplus--fell to INR 3.50 trillion Thursday from INR 3.71 trillion Wednesday. Dealers expect the weighted average rate of the call money market near repo and tri-party repo market around 5.15%.  (Cassandra Carvalho)  End

 

US$1 = INR 95.70

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

 

Edited by Deepshikha Bhardwaj

 

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