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Informist, Thursday, Sept. 10, 2026

 

By Aaryan Khanna

 

NEW DELHI – The one-day interbank call money rate ended near the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Thursday, as has been the case for several days amid ample liquidity surplus in the banking system. Subscription at the central bank's overnight variable rate reverse repo auction fell due to the liquidity drain from the RBI's likely dollar-rupee sell-buy swap operations in the secondary market, as well as funds tied up in initial public offerings, dealers said.

 

The RBI took all INR 3.97 trillion of offers at the overnight, INR-6.00-trillion VRRR auction at a cut-off rate of 5.24%, increasing the notified amount from Wednesday. However, the subscription was lower than the reversal of INR 4.62 trillion from Wednesday's overnight liquidity drain, which returned to banks Thursday.

 

"It is broadly the same pattern as the last few days," a dealer at a state-owned bank said. "I think the tendering was lower (at the VRRR auction) because banks are trying to figure out what sort of size RBI wants to do in (foreign exchange) forwards markets."

 

Surplus liquidity in the banking system remained comfortable, keeping the weighted average call rate below the RBI's SDF rate – the lower end of its Liquidity Adjustment Facility corridor – for the sixth straight weekday. The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 10.50 trillion Wednesday, little changed from INR 10.49 trillion Tuesday.

 

The weighted average call rate was 4.98%, against 4.99% Wednesday. The one-day call money rate ended at 5.05%, slightly above 5.00% at the open but lower than 5.10% Wednesday. The trade volume in the contract was INR 103.35 billion, compared to INR 119.23 billion Wednesday.

 

The one-day tri-party repo rate closed at 4.62%, against 4.65% at the open and 4.39% at the end of trade Wednesday. The weighted average call rate was 4.65%, against 4.59% Wednesday. The trade volume in the contract was INR 4.87 trillion for the third straight day.

 

Mutual funds faced redemptions from banks, pushing up the tri-party repo rate, dealers said. Indian financial markets will be shut on Monday for Ganesh Chaturthi. Mutual funds had expected redemptions to begin by Friday, and have begun Thursday as banks shore up cash reserves to meet advance tax outflows of around INR 2 trillion by Tuesday, they said.

 

OUTLOOK

The four-day call money rate is expected to open near the RBI's SDF rate due to low demand for funds from banks amid a hefty liquidity surplus, dealers said. Subscription at the RBI's 26-day, INR-5.00-trillion auction will be keenly watched. Money markets will be shut Monday for Ganesh Chaturthi. 

 

The measure's success may reduce the need for the RBI to drain liquidity through durable measures until its next policy review in early October, dealers said. At the same time, with overnight VRRRs expected to continue, banks are unlikely to park funds at the nearly four-week VRRR auction, they said. 

 

Activity in money markets may be muted as bank unions have threatened a nationwide strike on Friday at both state-owned and private sector lenders. Dealers expect the four-day call rate at 4.00–5.25% on Friday. The four-day tri-party repo rate is expected to be in the 3.50–5.15?nd. 

 

CALL RATE

5.05%--Thursday close for one-day loans

5.00%--Thursday open for one-day loans

5.10%--Wednesday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	WEDNESDAY
Overnight	5.04	5.04
3-day	--	--
14-day	5.66	5.63
1-month	5.83	5.81
3-month	6.33	6.34

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India Call: Below SDF rate; TREPS rises on dlr-rupee sell-buy, MF redemption

 

MUMBAI – The one-day interbank call money rate remained below the Reserve Bank of India's Standing Deposit Facility rate on Thursday, but the weighted average call rate topped 5.00% amid the central bank's likely dollar-rupee sell-buy swaps and ahead of tax outflows, dealers said. The weighted average tri-party repo rate rose from Wednesday amid the expected liquidity drain and as mutual funds faced redemption, dealers said. On a day that the central bank raised the size of its overnight variable rate reverse repo operation from those seen earlier this week, participation was below expectations, reflecting the hesitance in tendering funds, dealers said. 

 

The RBI took all offers worth INR 3.97 trillion at the overnight VRRR for INR 6 trillion, whereas an Informist poll had estimated subscription of INR 4.75 trillion. Advance tax outflows of about INR 2 trillion are due next week, with an extended weekend before that adding to demand for funds, dealers said. Some retail banking operations may also be affected Friday due to various unions representing bank employees going on strike, a few dealers said. 

 

Indian financial markets will be shut on Monday for Ganesh Chaturthi. Mutual funds had expected redemptions to begin by Friday, and have begun Thursday, they said. "Redemptions have started today (Thursday), but its effect we'll see more pronounced in TREPS tomorrow," a dealer at a mutual fund said. Further, the RBI likely conducted dollar-rupee sell-buy swaps for the second consecutive day Thursday, after about $2 billion on Wednesday, they said. "TREPS rates have gone up, so it won't be much (due to swaps) but it's also because of the sell-buy, among other reasons, as banks that receive dollars have to lend rupee," a dealer at a private sector bank said.

 

At 1530 IST, the weighted average call rate was 5.01%, against 4.99% Wednesday. The one-day call money rate was 4.60%, down from 5.00% at open and 5.10% Wednesday. The trade volume in the contract was INR 92.68 billion at the time, compared to INR 90.66 billion at 1530 IST Wednesday. At 1530 IST, the one-day tri-party repo rate was 4.80%, up from 4.65% at open and 4.39% at the end of trade Wednesday. The weighted average call rate was 4.64%, against 4.59% Wednesday. The trade volume in the contract was INR 4.60 trillion at the time, compared to INR 4.63 trillion at 1535 IST Wednesday. (Cassandra Carvalho)

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India Call: Not traded yet, TREPS below SDF; RBI raises overnight VRRR size

 

MUMBAI – The one-day interbank call money rate was not yet traded as of 0920 IST Thursday, with no bids or asks quoted on screen. The one-day tri-party repo rate traded sharply below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on low demand for funds, with surplus liquidity little changed at INR 10.5 trillion Wednesday. Traders observed that the RBI raised the size of its overnight variable rate reverse repo auction, which it has been conducting for INR 5 trillion this week, to INR 6 trillion for Thursday's operation.  

 

"Liquidity is there, it's not changed and people are not putting funds into asset classes so that's probably why RBI has increased the size," a dealer at a private-sector bank said. Traders are also on watch for any liquidity drain from the speculated dollar-rupee sell-buy swaps the central bank conducted in the secondary foreign exchange market Tuesday in one- and two-month tenures, dealers said. Traders in the foreign exchange market estimate the size of the swaps at around $2 billion to $3 billion. 

 

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was INR 10.50 trillion Wednesday, little changed from INR 10.49 trillion Tuesday. The 10.18%, 2026 bond redemption is due Friday, for over INR 150 billion. At 0920 IST, the one-day call rate was not traded, from 5.10% Wednesday. The weighted average call rate was 4.99% Wednesday, and is seen at a similar rate Thursday while the rate has been inching higher near the SDF rate since Friday. The one-day tri-party repo rate was 4.70%, against 4.39% Wednesday. The weighted average rate was 4.65%, from 4.59% Wednesday. The volume on the same contract was INR 1.13 trillion at 0920 IST against INR 1.52 trillion at 0930 IST Wednesday. (Cassandra Carvalho)

 

End

 

US$1 = INR 95.4400

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

 

Edited by Avishek Dutta

 

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