More Stories

Informist, Friday, Sept. 4, 2026

 

--Weighted avg call rate at 4.94%, lowest since Aug 4, 2022 barring Saturdays

 

By Cassandra Carvalho

 

MUMBAI – The three-day interbank call money rate ended at the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Friday, with the weighted average call rate at its lowest in over four years as surplus liquidity in the banking system Thursday hit its highest level since the RBI started compiling the data in January 2019. After market hours, the central bank said it would conduct a 30-day variable rate reverse repo auction Monday with the option of premature reversal, which is largely seen as a relief for traders who were expecting more permanent measures such as a hike in the cash reserve ratio. However, a few traders said participation at this VRRR would not be full and the central bank would have to introduce permanent measures to drain systemic liquidity.

 

"Is it (30-day VRRR) really going to address the situation? I don't think the market will participate fully," a dealer at a mutual fund said. "They are not even participating in one-day VRRRs, forget about longer ones." The RBI conducted two three-day VRRRs Friday, taking offers totalling INR 6.02 trillion against a combined notified size of INR 8.5 trillion. When traders were weighing the options that the RBI could consider to drain systemic liquidity, private-sector banks were more receptive to a longer-term VRRR while state-owned banks were largely of the view that unforeseen credit disbursement would limit participation at long-term VRRRs, dealers said. Albeit, most traders were satisfied with the choice of measure, with the RBI currently refraining from permanent measures.

 

The three-day tri-party repo rate ended at 3.48%, 177 basis points lower than the repo rate of 5.25%. Mutual funds sitting on excess cash had to deploy funds cheaply, with no access to the RBI's Standing Deposit Facility, they said. "He (RBI) has effectively given us a 100-bps rate cut," a dealer at another mutual fund had said of systemic liquidity, before the VRRR announcement. "We don't have SDF, and we can't carry cash because holding cash is penalising us."

 

Volume in the call money market was meagre, with borrowers preferring the low rates in the tri-party repo market, dealers said. The three-day call rate ended at 5.00% from 5.05% at Thursday's for one-day loans. The weighted average call rate was 4.94% -- the lowest since Aug. 4, 2022, barring Saturdays -- from 4.95% Thursday. The trade volume in the contract was INR 46.98 billion from INR 60.35 billion Thursday. The three-day tri-party repo rate ended at 3.48% Friday, further down from 4.60% at the open and 3.75% at Thursday's close, hitting a low of 3.00% intraday. The weighted average rate was 4.22%, down from 4.45% Thursday. The volume in the contract was INR 4.79 trillion, against INR 5.06 trillion Thursday.

 

OUTLOOK

The two-day call rate Saturday is seen below the RBI's Standing Deposit Facility amid hefty surplus liquidity and thin trade on poor demand for funds. As has been seen the past week, the call money market rate is likely to open much later in the session, with borrowers likely to prefer borrowing funds from the tri-party repo markets.

 

The systemic liquidity surplus is expected to hit INR 12 trillion over the weekend. Excise duty outflows of about INR 400 billion are scheduled by Monday, dealers said, barring which there is no major outflow and only further inflows expected until next week, dealers said. Outflows for advance tax and goods and services tax payments later this month will drain about INR 5 trillion. By the RBI's next policy meeting in October, core systemic liquidity could top INR 10 trillion, dealers said. Dealers expect the two-day call rate at 4.00–5.00% Saturday. The two-day tri-party repo rate is expected to be in the 3.50–5.00?nd. 

 

CALL RATE

5.00%--Friday close for three-day loans

4.75%--Friday open for three-day loans

5.05%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	4.91	5.01
3-day	--	--
14-day	5.62	5.70
1-month	5.92	5.98
3-month	6.44	6.51

 

---

India Call: Below SDF rate in thin trade; liquidity surplus at record high

 

MUMBAI – The three-day interbank call money market opened around 1024 IST with thin trade below the Reserve Bank of India's Standing Deposit Facility rate amid ample liquidity surplus in the banking system, dealers said. The three-day tri-party repo rate was near 4.30%, after opening at 4.60%, well below the RBI's Liquidity Adjustment Facility Corridor with the Standing Deposit Facility rate of 5.00% at its base. There was a lack of demand for funds from banks amid excessive surplus liquidity as the RBI's net liquidity absorption--a proxy for the banking system liquidity surplus--surged to INR 10.31 trillion on Thursday, dealers said. This is the highest level of liquidity surplus since the RBI started compiling the data in January 2019. 

 

"Who would want to borrow in call when TREPs are at such low levels," a dealer at a public sector bank said. "I think this liquidity will remain higher for at least two–three weeks from now, after which it might gradually start decreasing."   

 

The sharp rise in liquidity was largely driven by strong inflows from the settlement of foreign currency non-resident (banks) deposits at the swap window. On Wednesday, the RBI said banks had raised $127.23 billion through FCNR(B) deposits despite the early closure of the window, significantly higher than most market participants had expected. Only a few traders had anticipated inflows comfortably crossing $100 billion.

 

With most market participants expecting the RBI to hike the repo rate in the current calendar year, they also anticipate measures from the central bank to absorb excess liquidity from the banking system to ensure smooth transmission of rates, dealers said. While some traders expect the RBI to announce a temporary incremental cash reserve ratio, others do not expect any additional steps beyond variable-rate repo auctions, dealers said.

 

Amid excess liquidity, participation in the RBI's variable rate reverse repo operations increased compared to previous auctions. At the three-day VRRR auction of INR 7.00 trillion, the RBI accepted the entire INR 5.42 trillion in bids at a cut-off of 5.24%. However, the amount was below the market expectation of INR 6 trillion, based on the median of an Informist poll. Subsequently, the central bank announced another three-day VRRR auction of INR 1.50 trillion, with offers to be placed between 1200-1230 IST on Friday.

 

At 1103 IST, the three-day call rate was at 5.03% against 5.05% Thursday. The weighted average call rate was 4.98%, from 4.95% Thursday. The trade volume was INR 5.39 billion at 1103 IST from INR 1.51 billion at 1030 IST Thursday. The three-day tri-party repo rate was 4.30%, against 3.75% at close Thursday. The weighted average rate was 4.36%, from 4.45% Thursday. The volume on the same contract was INR 2.95 trillion at 1100 IST against INR 2.47 trillion at 1030 IST Thursday. (Janwee Prajapati)

 

End

 

US$1 = INR 94.4850

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

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.