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Informist, Wednesday, Sept. 9, 2026

 

By Aaryan Khanna

 

NEW DELHI – The one-day interbank call money rate ended above the Reserve Bank of India's Standing Deposit Facility rate of 5.00%, with both the closing level and the weighted average call rate inching up from earlier this week. With six initial public offerings opening Wednesday and state-owned banks increasing their participation in the RBI's variable rate reverse repo auction, some banks may have had to borrow money for cash needs at the end of the day, dealers said.

 

Three trades worth INR 6.00 billion were hit in the last five minutes of the session, all at 5.10%. The one-day call rate ended higher than 5.05% at close Tuesday. The weighted average call rate was 5.99% Wednesday from 5.98% Tuesday. The volume in the contract rose to INR 119.23 billion from INR 99.04 billion in the previous session.

 

"The IPOs didn't have that much of an impact but it could have led to some (cash) mismatches," a dealer at a private-sector bank said. "There is not as much buzz from institutional side for these issuances and anyway, there is enough liquidity for everyone to manage it comfortably."

 

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was INR 10.49 trillion Tuesday from INR 10.36 trillion Monday. At the overnight, INR-5.00-trillion VRRR auction at 0930-1000 IST, banks parked INR 4.62 trillion with the RBI at a cut-off rate of 5.24%. This was slightly higher than the reversal of INR 4.18 trillion from Tuesday's overnight VRRR tender. 

 

The tri-party repo rate for one-day loans ended at 4.39%, sharply below the floor of the RBI's policy corridor, though it was higher than 4.00% Tuesday. The weighted average rate in the market was 4.59% Wednesday against 4.58% Tuesday. The volume in the tri-party repo market was INR 4.86 trillion Wednesday, similar to Tuesday. The delay in the first call money trade at the beginning of the session had driven primary dealers to the tri-party repo market, dealers said. 

 

"We are getting more comfortable in borrowing from repo markets as banks are not ready to lend in the call market in the morning," a dealer at a primary dealership said. "So while the preference is to do uncollateralised borrowing, we have to meet our needs in time in the morning."

 

OUTLOOK

Wednesday, the one-day call rate is seen near the RBI's Standing Deposit Facility amid hefty surplus liquidity. Market participants in need of cash are likely to prefer borrowing funds from the tri-party repo market, leading to poor volume in the call market, dealers said. 

 

The banking system liquidity could rise to near INR 12 trillion this week as the window for swapping FCNR(B) deposits ends on Friday, dealers said. Attention will be on the RBI's liquidity measures to bring the weighted average call rate back to the policy corridor. The central bank will conduct an overnight, INR-6.00-trillion VRRR auction at 0930-1000 IST Thursday. 

 

Outflows for advance tax and goods and services tax payments later this month will drain about INR 4.50 trillion from the banking system. By the RBI's next policy meeting in October--which is the same day as the reversal of the 30-day VRRR--core systemic liquidity is likely top INR 10 trillion, which could merit permanent measures to drain the liquidity surplus, dealers said. Dealers expect the one-day call rate at 4.00–5.25% Thursday. The one-day tri-party repo rate is expected to be in the 3.50–5.15?nd. 

 

CALL RATE

5.10%--Wednesday close for one-day loans

5.00%--Wednesday open for one-day loans

5.05%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.04	5.03
3-day	--	--
14-day	5.63	5.54
1-month	5.81	5.82
3-month	6.34	6.36

 

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India Call: At SDF rate; PSU banks' participation at VRRRs rises

 

MUMBAI – The one-day interbank call money rate was at the Reserve Bank of India's Standing Deposit Facility rate of 5.00%, while the one-day tri-party repo rate traded sharply below the rate as liquidity surplus remained ample with little demand for funds, dealers said. Banks continued to borrow at lower rates in the tri-party repo market to lend in the call market, dealers said. 

 

Tuesday's subscription at the RBI's overnight variable rate reverse repo operation for INR 5 trillion set a precedent for auctions to come, at least for this week, dealers said. The RBI is seen continuing with overnight operations, with the INR-5-trillion operation seen attracting robust tendering Wednesday as well, dealers said. The RBI took all offers worth INR 4.18 trillion at Tuesday's auction. Subscription at Wednesday's operation is seen similar, at INR 4 trillion, as per the median of an Informist Poll of nine participants. A few dealers expect a second overnight VRRR operation. "It just depends on the subscription at the first VRRR, if we have a 4-lakh-crore (INR 4 trillion) subscription, then RBI won't have to come up with another one (VRRR)," a dealer at a private-sector bank said. 

 

This week, state-owned banks' participation at VRRRs has increased, dealers said. If this participation at VRRRs continues, the RBI may not opt for measures to drain durable liquidity in the near term, some dealers said. Overnight rates still remain sharply below the RBI's preferred level despite the VRRRs. The weighted average call money rate has steadily risen from 4.94% Friday, to 4.97% Monday and 4.98% Tuesday, but remains below the SDF rate. Liquidity surplus is unlikely to rise further in the near term, as the window to swap dollars received through FCNR(B) deposits shuts Friday, and with major outflows for tax lined up this month, dealers said.

 

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was INR 10.49 trillion Tuesday from INR 10.36 trillion Monday. At 0951 IST, the one-day call rate was at 5.00%, from 5.05% Tuesday. The weighted average call rate was 4.98% Tuesday, and is seen at a similar rate Wednesday. The one-day tri-party repo rate was 4.66%, against 4.00% Tuesday. The weighted average rate was 4.65%, from 4.58% Tuesday. The volume on the same contract was INR 2.23 trillion at 0951 IST against INR 1.61 trillion at 0930 IST Tuesday.  (Cassandra Carvalho)

 

End

 

US$1 = INR 95.11

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

 

Edited by Deepshikha Bhardwaj

 

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