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Informist, Monday, Aug. 24, 2026

By Aaryan Khanna

NEW DELHI – The one-day interbank call money rate rose to close near the Reserve Bank of India's policy repo rate of 5.25% after easing to below the standing deposit facility rate in the middle of the day. Dealers said there was an increase in demand from banks to meet daily cash requirements near the end of trade, especially with funds locked up in initial public offerings from last week and Monday.

"It looks like a few banks were probably short of product requirements," a dealer at a private-sector bank said. "In general, there has been a lot of interest in IPOs over the last week or so and even this week there are three good ones. So money is stuck there and is holding up the weighted average call rate."

The one-day call rate ended at 5.20% Monday, down from 5.25% at the open but unchanged from Friday's close for three-day loans. The weighted average call rate was 5.19%, unchanged from Friday. The trade volume in the most-traded contract was INR 171.46 billion, up from INR 132.84 billion in the three-day contract Friday.

The one-day tri-party repo rate closed at 4.85% Monday, down from 5.05% at open from 5.00% at Friday's close on the three-day contract. The weighted average rate was 5.02%, lower than 5.07% Friday. The volume of the contract was INR 4.81 trillion, rising from INR 4.53 trillion in the most-traded contract Friday.

Another reason for the weighted average call rate to hover near the policy repo rate has been the central bank's consistent variable rate reverse repo auctions, dealers said. The RBI conducted a seven-day VRRR auction for INR 2.5 trillion Monday, the largest notified size so far this month, and took all offers worth INR 919.80 billion. The central bank later conducted an overnight VRRR for INR 1.50 trillion, but that, too, saw poor subscription at just INR 492.06 billion.

The second announcement was widely expected as it followed the pattern the central bank has followed over the past two weeks, dealers said. Two VRRR auctions adding up to nearly INR 2 trillion matured Monday, but subscriptions were poor as funds were tied up in IPOs, dealers said. Tempsens Instruments (India) Ltd. is looking to raise INR 6.50 billion at its IPO closing Monday, but the offering was subscribed 51 times the amount of shares.

The net liquidity absorbed by the RBI--a proxy for liquidity surplus--was INR 3.40 trillion Sunday, similar to Friday and Saturday but slightly down from INR 3.50 trillion Thursday. Banks maintained a cash balance of only INR 7.93 trillion with the central bank Sunday, against the average daily regulatory requirement of INR 8.17 trillion in the fortnight ending Aug. 31. The cash balances so far in the reportnight have undershot the average daily requirement as well, which may lead to higher cash parking and marginally lower liquidity surpluses in the rest of the reportnight fortnight.

At the same time, liquidity is expected to continue rising until the end of the month due to government spending and consistent large inflows from the RBI's specialised foreign currency non-resident (banks) deposit scheme, dealers said. Some dealers expect around $20 billion of FCNR(B) inflows in the last 10 days of the special scheme, from $65.40 billion between Jun. 8 and Friday.

OUTLOOK

On Tuesday, the two-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. Money markets are shut Wednesday for Id-e-Milad.

The RBI will conduct a two-day VRRR auction for INR 1.75 trillion at 0930-1000 IST Tuesday. The auction may be poorly subscribed as banks have cash stuck in subscriptions for equity initial public offerings.

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

CALL RATE

5.20%--Monday close for one-day loans

5.25%--Monday open for one-day loans

5.20%--Friday close for three-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Eases near SDF rate; banks avoid VRRRs to keep cash for IPOs

MUMBAI – The one-day interbank call money rate fell near the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Monday after early demand for funds--which had kept the call rate near the RBI's repo rate--eased and two variable rate reverse repo operations conducted by the RBI during the day saw weak subscription of about 35%.

The RBI conducted a seven-day VRRR auction for INR 2.5 trillion Monday, the largest notified size so far this month, and took all offers worth INR 919.80 billion. As expected, the central bank later conducted an overnight VRRR--a tenure market participants usually prefer--for INR 1.50 trillion, but that too saw poor subscription at just INR 492.06 billion. This was in spite of the redemption of two VRRR auctions adding up to nearly INR 2 trillion Monday.

Traders preferred to keep cash in hand to participate in several initial public offerings lined up this week, dealers said, especially after outflows for goods and services payments. "Some managers are expecting 200 times subscription for today's (Monday's) IPO (of Tempsens Instruments), so for 450 crore (INR 4.50 billion) that would be ninety thousand crores (INR 900 billion) parked," a dealer at a private-sector bank said.

However, rates in the overnight borrowing markets were low as the system-wide liquidity surplus remained ample, with further inflows expected this week through foreign currency non-resident (banks) deposits, dealers said. "This time the net GST outflow has been forty to fifty thousand (crores, or INR 400 billion-INR 500 billion), slightly lesser. Normally we see a net outflow of sixty to seventy (INR 600 billion to INR 700 billion)," a dealer at another private-sector bank said. Augmont Enterprises is another IPO traders are tracking, along with Lumino Industries later in the week. 

At 1415 IST, the one-day call rate was 4.90%, down from 5.25% at Monday's open and 5.20% at Friday's close for three-day loans. The weighted average call rate was 5.21%, up from 5.19% Friday. The trade volume in the contract was INR 123.71 billion, up from INR 100.36 billion at 1430 IST Friday.

At 1415 IST, the one-day tri-party repo rate was 4.95%, down from 5.05% at open and close to 5.00% at Friday's close on the three-day contract. The weighted average rate was 5.04%, against 5.07% Friday. The volume in the contract was INR 4.10 trillion, up from INR 3.96 trillion at 1430 IST Friday.  (Cassandra Carvalho)

India Call: At repo rate; RBI conducts largest VRRR auction this month

MUMBAI – The one-day interbank call money rate traded at the Reserve Bank of India's repo rate of 5.25% amid early demand for funds from primary dealerships and amid the RBI's largest variable rate reverse repo auction held so far this month, dealers said. The central bank conducted a VRRR auction for INR 2.5 trillion Monday, subscription at which is seen at INR 1.5 trillion, according to an Informist Poll of nine participants. 

Most traders do not believe that the auction will see firm subscription due to the seven-day tenure. The central bank could conduct a shorter-tenure VRRR auction later in the session if the seven-day operation sees poor subscription, they said. Albeit, nearly INR 2 trillion of cash will be released Monday due to the redemption of two VRRRs; a seven-day operation and a three-day operation. 

Surplus liquidity is seen getting a boost this week on inflows in the last days of the RBI's concessional dollar-rupee swap window on foreign currency non-resident bank deposits, dealers said. Some state-owned banks which received hefty inflows last week have invested those funds, especially in government securities, dealers said. Data released by the RBI Saturday showed inflows from FCNR(B) deposits at $65.40 billion till Friday from Jun. 8. Within a week, inflows through these deposits topped $13 billion. Traders had expected inflows of at least $15 billion through these deposits in the last fortnight of August. "I think liquidity would've risen over the weekend, it's not showing in Friday's figure but this week will see some good flows because of FCNR(B)," a dealer at a state-owned bank said. The net liquidity absorbed by the RBI--a proxy for liquidity surplus—was INR 3.40 trillion Friday from INR 3.50 trillion Thursday.

At 0935 IST, the one-day call rate was at 5.25%, against 5.20% at Friday's close for three-day loans. The weighted average call rate was 5.25%, up from 5.19% Friday. The trade volume on the same contract was INR 23.55 billion at 0935 IST from INR 2.00 billion at 0940 IST Friday. At 0935 IST, the one-day tri-party repo rate was 5.03%, against 5.00% at Friday's close for three-day loans. The weighted average rate was 5.04% against 5.07% on Friday. The volume on the same contract was INR 1.10 trillion at 0935 IST, against INR 1.22 trillion at 0930 IST Friday. Dealers expect the weighted average rate of the call money market near 5.15% and that of the tri-party repo market near 5.05%.  (Cassandra Carvalho)

End

US$1 = INR 95.7450

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

Edited by Deepshikha Bhardwaj

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