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Informist, Wednesday, Sept. 16, 2026

 

By J. Navya Sruthi

 

MUMBAI – The interbank call money rate for one-day loans ended near the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Wednesday due to lack of demand for funds amid ample liquidity in the banking system, dealers said. Although the liquidity surplus fell due to scheduled outflows of around INR 1.7 trillion for advance tax payments for income tax and corporation tax for the September quarter, it remained in excess.

 

The tri-party repo rate rose to an intraday high of 5.05% Wednesday, the first since Sept. 4, due to outflows of advance tax payments, dealers said. The tax outflows also led to a lower-than-expected subscription at the RBI's second overnight variable rate reverse auction for INR 1 trillion, dealers said. 

 

"The first VRRR auction was oversubscribed, but by the time the second VRRR was announced, people were already investing in other alternatives with better returns," a dealer at a primary dealership said. "TREPs also rose to 5.05?cause of tax outflows, which also led to lower subscription at the second VRRR (auction)," the dealer said. Most market participants participated in the treasury bill auction due to expected higher returns. The RBI set a cut-off yield of 6.0386% on the 364-day T-bill at Wednesday's auction, the highest since April 2025. 

 

The market was expecting the second VRRR to be subscribed for INR 700 billion, according to the median of an Informist poll. However, the RBI received just INR 403.02 billion in offers at the second overnight auction for INR 1 trillion. The RBI conducted a second VRRR auction after the first was oversubscribed for the first time since Apr. 10. At the first overnight VRRR auction for INR 2.50 trillion, the RBI received INR 3.17 trillion in offers and took INR 2.50 trillion at a cut-off rate of 5.24%. 

 

Wednesday, the one-day call rate ended at 5.10%, down from 5.20% Tuesday. The weighted average call rate was 5.02% Wednesday, down from 5.06% Tuesday. Volume in the one-day call money contract was INR 133.59 billion, up from INR 129.92 billion Tuesday. The one-day tri-party repo rate ended at 5.00% Wednesday, sharply up from 4.26% Tuesday. The weighted average rate was at 4.87% Wednesday, up from 4.85% Tuesday. Volume in the one-day contract was INR 5.20 trillion, compared with INR 5.19 trillion Tuesday.

 

OUTLOOK

The one-day call money rate is expected to open above the RBI's Standing Deposit Facility rate of 5.00%, at 5.05-5.10%, on Thursday ahead of the RBI's INR-500-billion open market operations auction to sell gilts, dealers said. The RBI will be selling gilts worth INR 1 trillion through open market operations during the month to drain excess liquidity from the banking system. The tri-party repo rate is likely to open in the 4.80-4.85% range, dealers said. Dealers expect the one-day call rate to be at 4.50–5.15% Wednesday.

 

As advance tax outflows of around INR 1.70 trillion for the September quarter are completed, market participants expect the RBI to continue overnight VRRR auctions of around INR 3 trillion. After outflows of goods and services tax payments, the RBI is likely to reduce the size of the VRRR auctions further. The central bank will conduct an overnight INR-3.00-trillion auction to drain liquidity at 0930-1000 IST Thursday. 

Market participants will take cues from the RBI's INR-500-billion open market operations auction Thursday to sell gilts, dealers said. Some market participants expect the RBI to conduct more open market operations auctions to sell gilts after selling INR-1-trillion worth of gilts in September. "CRR (Cash reserve ratio) hike is counterintuitive, so RBI may come up with more OMO sales," a dealer at a private sector bank said.

 

CALL RATE

5.10%--Wednesday close for one-day loans

5.05%--Wednesday open for one-day loans

5.20%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.05	5.09
3-day	--	--
14-day	5.81	5.73
1-month	5.92	5.88
3-month	6.32	6.33

 

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India Call: Below RBI's SDF rate; TREPs rises above 5% on tax outflows

 

MUMBAI – The one-day interbank call money rate was below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% but the tri-party repo rate for one-day loans rose above the floor rate for the first time since Sept. 4 due to outflows for advance tax payments for income tax and corporation tax, dealers said. The outflows for tax payments also led to lower than expected subscription at the RBI's second overnight variable rate reverse auction for INR 1 trillion, dealers said. 

 

"Today (Wednesday) around INR 1.0 trillion (outflows) are expected for advance tax," a dealer at a private sector bank said. Dealers said around INR 500 billion to INR 600 billion outflows for tax payments were seen Tuesday. They said some banks were seen borrowing in the tri-party repo rate market due to tax outflows.

 

The weighted average rate in the tri-party repo market was 4.86%, against 4.85% Tuesday. The tri-party repo rate for one-day loans rose to an intraday high of 5.03%, the first time it rose above the Standing Deposit Facility rate since Sept. 4. At 1459 IST, the one-day tri-party repo rate was 4.91%, compared to 4.26% Tuesday. The volume in the same contract was INR 4.71 trillion at the same time, against INR 4.57 trillion at 1430 IST Tuesday. 

 

At 1459 IST, the one-day call rate was 4.80%, sharply lower than 5.20% Tuesday. The weighted average call rate was 5.03%, down from 5.06% Tuesday. The trade volume in the same call money contract was INR 111.28 billion, against INR 90.92 billion at 1430 IST Tuesday.

 

However, both the tri-party repo rate and call money rate remain sharply below the RBI's policy rate of 5.25%. The weighted average call rate, the operating target of monetary policy, also stayed near the lower end of the Liquidity Adjustment Facility as liquidity in the system remained in surplus. The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 9.85 trillion Tuesday, down from INR 10.41 trillion Monday.

 

The RBI's second overnight VRRR auction for INR 1 trillion was undersubscribed. The RBI conducted a second VRRR as the first one was oversubscribed for the first time since Apr. 10. The market was expecting the second VRRR to be subscribed for INR 700 billion, according to the median of an Informist poll. However, due to outflows for advance tax payments, the RBI received just INR 403.02 billion offers at the second auction. At the first overnight VRRR auction for INR 2.50 trillion, the RBI received INR 3.17 trillion of offers and took INR 2.50 trillion of offers at a cut-off rate of 5.24%. 

 

Dealers expect the RBI to continue to conduct overnight VRRR auctions on a daily basis. They expect the central bank to conduct an auction for INR 3 trillion to INR 4 trillion Thursday. Market participants will take cues from the RBI's INR-500-billion open market operations auction Thursday to sell gilts, dealers said.  (J. Navya Sruthi)

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India Call: Near SDF rate on ample liquidity; seen up later on tax outflows

 

MUMBAI – The one-day interbank call money rate was near the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to ample liquidity in the banking system despite some outflows for advance tax payments for income tax and corporation tax for the current quarter, dealers said. However, they expect the call rate to rise later during the day as the large portion of tax outflows are scheduled for Wednesday.  

 

Dealers said around INR 500 billion to INR 600 billion outflows for tax payments were seen Tuesday. They expect a total of INR 1.50 trillion to INR 1.8 trillion outflows towards tax payment. "Most funds will go out (of the system) today (Wednesday)," a dealer at a private sector bank said. 

 

At 1000 IST, the one-day call rate was 5.05%, down from 5.20% Tuesday. The weighted average call rate was 5.05%, against 5.06% Tuesday. The trade volume in the same call money contract was INR 11.23 billion, against INR 16.21 billion at 1030 IST Tuesday. The one-day tri-party repo rate was 4.80%, compared to 4.26% Tuesday. The weighted average rate was 4.81%, against 4.85% Tuesday. The volume on the same contract was INR 2.40 trillion at the same time, against INR 914.48 billion at 0930 IST Tuesday.

 

The tri-party repo rate was also slightly lower compared to its opening level on Tuesday as the RBI also reduced the size of its daily variable rate reverse repo auction from INR 5 trillion to INR 2.50 trillion Tuesday. According to the median of an Informist poll by eight market participants, dealers expect offers from INR 1.50 trillion to INR 2.50 trillion with the median at INR 2.00 trillion. 

 

Some dealers expect the INR-2.50-trillion overnight VRRR auction to be fully subscribed, as the one conducted on Tuesday for INR 5.00 trillion received INR 3.94 trillion offers. "Yesterday's (auction) subscription was higher, so maybe it will go full," the dealer said.     

 

The RBI reduced the size of the VRRR auction from INR 5 trillion earlier as the liquidity surplus in the banking system fell below the INR-10-trillion level, the first time since Sept. 2, dealers said. Liquidity surplus in the banking system fell due to outflows for payment of advance tax for income tax and corporation tax for the September quarter. The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 9.85 trillion Tuesday, down from INR 10.41 trillion Monday.  (J. Navya Sruthi)

End

 

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

 

Edited by Saji George Titus

 

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