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Informist, Tuesday, Aug. 25, 2026

 

By Aaryan Khanna

 

NEW DELHI – The two-day interbank call money rate closed below the Reserve Bank of India's repo rate due to ample liquidity surplus, the fourth straight session that the most-traded contract has ended at 5.20%. The contract was last traded at 1801 IST, likely a bank borrowing to meet two-day cash requirements even as funding conditions remained comfortable through the day, dealers said. Money markets will remain shut Wednesday for Id-e-Milad.

 

The two-day call rate ended at 5.20% Tuesday, down from 5.25% at the open but unchanged from Monday's close for one-day loans. The weighted average call rate was 5.18% from 5.19% Monday. The volume in the two-day contract was INR 141.01 billion, down from INR 171.46 billion in the one-day contract Monday.

 

The two-day tri-party repo rate closed at 5.07% Tuesday, up from 5.01% at open and from 4.85% at Monday's close on the one-day contract. The weighted average rate was 5.01%, similar to 5.02% Monday. The volume of the contract was INR 4.78 trillion, also similar to INR 4.81 trillion in the most-traded contract Monday.

 

"We can't really see a change on a day-to-day basis. The market is trading with the same range and with the same motivations from yesterday (Monday)," a dealer at a state-owned bank said. "A lot of the market is interested in the IPOs or they are parking money at the VRRR (variable rate reverse repo auctions), but there is enough liquidity to fund everything."

 

A slew of initial public offerings and credit disbursement needs has kept lending rates near the repo rate in early trade. Enthusiasm for upcoming subscriptions has also led banks to participate less enthusiastically at the RBI's VRRR auctions, dealers said. The central bank accepted all offers worth INR 985.16 billion at its two-day, INR-1.50-trillion variable rate reverse repo auction at a cut-off rate of 5.24%. 

 

The net liquidity absorbed by the RBI--a proxy for liquidity surplus—was INR 3.64 trillion Monday, up from INR 3.40 trillion Sunday. Funds parked under the RBI's Standing Deposit Facility rose to a 10-day high of INR 2.31 trillion Monday. Inflows from foreign currency non-resident (banks) deposits are expected to continue adding to systemic liquidity, with the government's month-end spending also likely to kick in from Thursday, dealers said.

 

OUTLOOK

On Thursday, 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, dealers said. Money markets will remain shut Wednesday for Id-e-Milad.

 

The RBI will conduct an overnight VRRR auction for INR 2.00 trillion at 0930-1000 IST Thursday. The auction may be half-subscribed as banks have cash stuck in subscriptions for equity initial public offerings.

 

Dealers expect the one-day call rate at 4.60–5.30% Thursday. The 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%--Tuesday close for two-day loans

5.25%--Tuesday open for two -day loans

5.20%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	MONDAY
Overnight	5.22	5.24
3-day	--	--
14-day	5.80	5.81
1-month	6.07	6.07
3-month	6.55	6.54

 

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India Call: At repo rate on demand for credit disbursements

 

MUMBAI – The two-day interbank call money rate traded at the Reserve Bank of India's repo rate of 5.25% Tuesday amid early demand for funds from primary dealerships, while some banks borrowed to provide for two-day funding requirements and credit disbursements, dealers said. Money markets will remain shut Wednesday for Id-E-Milad. Subscription at the central bank's two-day variable rate reverse repo operation for INR 1.75 trillion is seen moderate, with INR 919.80 billion already parked in the seven-day operation conducted Monday, dealers said. According to an Informist Poll of eight market participants, subscription at the auction is seen at INR 1.05 trillion. 

 

"Month-end there is always some credit disbursements and there are less working days also this week so I'm not expecting full subscription," a dealer at a state-owned bank said. Some dealers said participation at the VRRR could be aggressive due its overnight tenure and since liquidity is improving nearing the closure of the RBI's dollar-rupee swap window for foreign currency non-resident bank deposits. Since Wednesday is a holiday, the RBI has advanced some banks' scheduled day for swapping dollar inflows to Tuesday, dealers said. The net liquidity absorbed by the RBI--a proxy for liquidity surplus—was INR 3.64 trillion Monday, up from INR 3.40 trillion Sunday. Even as banks were "self-sufficient" for their funding needs amid inflows, demand for initial public offerings and credit disbursements kept lending in overnight markets low, dealers said. Funds parked under the RBI's Standing Deposit Facility rose to a 10-day high of INR 2.31 trillion Monday. 

 

At 0940 IST, the two-day call rate was at 5.25%, against 5.20% at Monday's close for one-day loans. The weighted average call rate was 5.21%, up from 5.19% Monday. The trade volume on the same contract was INR 9.99 billion at 0940 IST from INR 12.95 billion at 0930 IST Monday. At 0940 IST, the two-day tri-party repo rate was 5.02%, against 5.00% at Monday's close for one-day loans. The weighted average rate was 5.01% against 5.02% on Monday. The volume on the same contract was INR 1.57 trillion at 0940 IST, against INR 913.31 billion at 0930 IST Monday. Dealers expect the weighted average rate of the call money market near 5.15% and that of the tri-party repo market near 5.00%.  (Cassandra Carvalho)  End

 

US$1 = INR 95.41

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

 

Edited by Deepshikha Bhardwaj

 

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