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Informist, Tuesday, Sept. 15, 2026

 

By J. Navya Sruthi

 

MUMBAI – The interbank call money rate Tuesday ended near the Reserve Bank of India's repo rate of 5.25% due to last-minute demand for funds, dealers said. The uptick in demand for funds from some banks to meet fortnight closure funding requirements and outflows for advance tax payments for income tax and corporation tax for the current quarter pushed the weighted average rate of call and tri-party repo markets higher from the previous week. The Mumbai Interbank Outright Rate for the overnight segment was 5.09% on Tuesday, the highest since Sept. 2. 

 

The last two trades in the call money market were carried out at 5.20%, which totalled just INR 500 million, according to data available with Cogencis. Dealers said there was late demand for funds, but the volume was negligible. Tuesday, the one-day call rate ended at 5.20%, the highest closing level since Aug. 27 and up from 5.10% on Friday for four-day loans. The weighted average call rate was 5.06% Tuesday, against 5.02% Friday. The trade volume in the same call money contract was INR 129.92 billion, against INR 127.92 billion Friday.

 

"TREPs (tri-party repo market) volume rose above INR 5 trillion due to reporting fortnight and advance tax flows," a dealer at a state-owned bank said. Market participants said INR 500 billion to INR 600 billion of outflows for advance tax payments were seen Tuesday, and the rest of the outflows are expected Wednesday. "It was a long weekend, so some flows are seen tomorrow as well," the dealer said. 

 

The one-day tri-party repo rate ended at 4.26% Tuesday, down from 4.99% for four-day loans Friday. However, the weighted average rate was higher at 4.85% against 4.68% Friday. The volume in the same segment was INR 5.19 trillion, the highest since Jun. 9.

 

Market participants expect the weighted average call rate to rise to the central bank's policy rate of 5.25% by the end of September due to tax outflows and quarter-end credit requirement. However, they expect the liquidity surplus in the banking system to be around INR 7.5 trillion by the end of this month. The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 10.41 trillion Monday, down from INR 10.81 trillion Sunday and INR 10.82 trillion Saturday. On Friday, the liquidity surplus was INR 10.73 trillion, but it increased over the weekend as banks reduced their cash balances.

 

Most market participants expect the RBI's Monetary Policy Committee to hike key interest rates by 25 basis points at the October meeting due to rising inflationary pressure amid firm crude oil prices and climate risks. "Going forward, we believe CPI inflation may cross 6.5% mark before dropping to less than 6% in the early 2027," according to a report by SBI Research. Market participants expect a 75-bps rate hike by the central bank in its next three MPC policies and at least a 50-bps hike by the end of 2026. 

 

Despite the RBI's announcement of the sale of INR 1 trillion of gilts through open market operation auctions in September, some dealers still expect the central bank to hike the cash reserve ratio by 100 bps to 4% as one of the measures to drain out excess liquidity from the banking system. "RBI should normalise 4% CRR which will give market a signal," a dealer at a foreign bank said. "Signalling of this CRR hike should be proper so that there will not be any panic in the market," the dealer said. 

 

OUTLOOK

The one-day call money rate is seen opening above the RBI's Standing Deposit Facility rate of 5.00% on Wednesday due to early demand for funds from primary dealers. There is likely to be demand from some banks too as major portion of advance tax payments for income tax and corporation tax for the September quarter will be seen Wednesday, dealers said. The tri-party repo rate is likely to open in the range of 4.80-4.85%, dealers said. Dealers expect the one-day call rate to be at 4.50–5.18% Wednesday.

 

Overnight VRRR auctions are expected to continue till the end of this month. But most market participants expect the RBI to reduce the size of the auction from INR 5 trillion to around INR 3.5 trillion for the rest of the month as the banking system liquidity surplus is likely to fall post tax outflows. Some market participants expect the RBI to conduct a seven-day VRRR auction, but most market participants favour overnight auctions. Market participants will take cues from the RBI's INR-500-billion open market operations auction Thursday to sell gilts, dealers said. The central bank will conduct an overnight INR-2.50-trillion auction to drain liquidity at 0930-1000 IST Wednesday. 

 

CALL RATE

5.20%--Tuesday close for one-day loans

5.10%--Tuesday open for one-day loans

5.10%--Friday close for four-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	TUESDAY	FRIDAY
Overnight	5.09	5.03
3-day	--	--
14-day	5.73	5.68
1-month	5.88	5.84
3-month	6.33	6.33

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India Call: Below SDF; mkt expects RBI to reduce VRRR size post tax outflows

 

MUMBAI – The interbank call money rate and tri-party repo rate for one-day loans were below the Reserve Bank of India's Standing Deposit Facility rate of 5.00%. However, the weighted average rate in both the markets rose from last week due to demand for funds amid outflows of INR 1.5 trillion to INR 1.8 trillion for advance tax payments for income tax and corporation tax, dealers said.    

 

At 1611 IST, the one-day call rate was 4.85%, down from 5.10% Friday for four-day loans. The weighted average call rate was 5.06%, against 5.02% Friday. The trade volume in the same call money contract was INR 98.66 billion, against INR 116.07 billion at 1630 IST Friday. The one-day tri-party repo rate ended at 4.26%, down from 4.99% for four-day loans Friday. However, the weighted average rate was higher at 4.85% against 4.68% Friday. The volume in the market was INR 5.20 trillion, against INR 4.85 trillion Friday.

 

Although market participants expect the RBI to continue with daily variable rate reverse repo auctions, they expect the central bank to reduce the size of these auctions from the current INR 5 trillion to INR 3 trillion, dealers said. Some dealers also expect the RBI to conduct VRRR auctions for four to seven days instead of overnight VRRR auctions every day. At the overnight, INR-5-trillion VRRR auction, the RBI took all INR-3.93-trillion offers and set the cut-off at 5.24%.  

 

"RBI brought OMO also now, so they should do either four- to seven-day VRRRs. They will not come with any long-term (reverse) repos as they announced OMO (sales)," a dealer at a foreign bank said. According to data compiled by Informist, of 15 VRRR auctions conducted by the RBI in the current fortnight which started on Sept. 1, 12 auctions reversed on the next weekday. There was higher participation in these auctions compared to those for longer tenures.

 

Moreover, dealers expect the RBI to reduce the VRRR auction size due to outflows of another INR 1.75 trillion to INR 1.90 trillion for payments for goods and services tax outflows scheduled next week. By the end of September, dealers expect the liquidity surplus in the banking system to be in the range of INR 7.50 trillion to INR 8.5 trillion. 

 

The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 10.41 trillion Monday, down from INR 10.81 trillion Sunday and INR 10.82 trillion Saturday. Friday, the liquidity surplus was INR 10.73 trillion, but it increased over the weekend as banks reduced their cash balances.  (J. Navya Sruthi)

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India Call: Above RBI's SDF rate; seen higher later on tax outflows

 

MUMBAI – The interbank call money rate for one-day loans was above the Reserve Bank of India's Standing Deposit Facility rate of 5% due to demand for funds amid scheduled outflows for advance tax payments for income tax and corporation tax, dealers said. They expect overnight rates to rise further during the day due to these scheduled outflows and the last day of the reporting fortnight. The one-day tri-party repo rate was, however, below the Reserve Bank of India's Standing Deposit Facility rate as the system liquidity surplus remained above INR 10 trillion.

 

"TREPS opened at 4.90%, a bit higher than earlier rates, so call (rate) is also seen up," a dealer at a state-owned bank said. "TREPS (tri-party repo rate) may go to 5.10% today (Tuesday) and call may be at 5.24?cause of advance tax payments," the dealer said. Market participants expect INR 1.50 trillion to INR 1.80 trillion worth of outflows for tax payments during the day. 

 

According to data available on the interbank call money rate for one-day loans opened at 5.10%, which is the highest level since Sept. 2. Similarly, the tri-party repo rate was dealt at 4.90%, the highest opening level since Sept. 2.  

At 1006 IST, the one-day call rate was 5.10%, steady from Friday for four-day loans. The weighted average call rate was 5.09%, against 5.02% Friday. The trade volume in the same call money contract was INR 4.48 billion, against INR 17.85 billion at 1030 IST Friday. The one-day tri-party repo rate was 4.90%, compared to 4.99% for four-day loans Friday. The weighted average rate was 4.88%, against 4.68% Friday. The volume on the same contract was INR 1.94 trillion at 1007 IST, against INR 2.02 trillion at 1030 IST Friday.

 

Meanwhile, the central bank continued with its liquidity drain out operations to keep the weighted average call rate around the policy rate of 5.25%. It conducted an overnight, INR-5.00-trillion variable rate reverse repo auction between 0930 IST to 1000 IST Tuesday. Dealers said the central bank's overnight VRRR auction is likely to be under subscribed due to the need for funds for tax payments. 

 

According to the median in an Informist Poll, market participants expect total offers between INR 2.00 trillion and INR 4.00 trillion at the auction, with a median estimate of INR 3.25 trillion. All cut-off estimates by total of seven market participants were at the highest level of 5.24%. 

 

A 15-day VRRR auction conducted on Aug. 31 matures Tuesday, which will return around INR 1.35 trillion to banks. The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 10.73 trillion Friday, up from INR 10.43 trillion Thursday.   

 

Friday, the RBI conducted two VRRR auctions, of which one was for 26 days, with a reversal scheduled on Oct. 7, the same as the day of the central bank's Monetary Policy Committee outcome. However, there was poor subscription at the INR-5-trillion auction, where the central bank took all INR-604.49-billion offers. Later, it also conducted a four-day, INR-5-trillion VRRR auction Friday at which the RBI accepted all INR-3.45-trillion offers, which will also be reversed Tuesday.  (J. Navya Sruthi)

 

End

 

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

 

Edited by Avishek Dutta

 

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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.

 

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