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Informist, Friday, Sept. 18, 2026

 

By Cassandra Carvalho

 

MUMBAI – The three-day interbank call money rate ended at the Reserve Bank of India's repo rate Friday for the first time since Aug. 28 on demand for funds for credit disbursements and initial public offerings, dealers said. The weighted average tri-party repo rate ended above the Standing Deposit Facility rate, also for the first time since Aug. 28. Systemic liquidity fell for the fifth consecutive session as the central bank continued to drain liquidity amid tax outflows.  

 

The RBI took all offers worth INR 2.23 trillion at its INR-2.25-trillion, three-day VRRR auction Friday, much higher than an Informist poll estimate of INR 1.69 trillion. Later in the day, the three-day tri-party repo rate hit a high of 5.50%, the Marginal Standing Facility rate. "People have miscalculated what they need and put too much into VRRR as you can see today (Friday)," a dealer at a mutual fund said.

 

Traders borrowed funds to participate in IPOs including those of SS Retail Ltd., Jindal Supreme (India) Ltd. and Hero Motors Ltd., with the former two seeing subscription of over 100 times Friday. Quarter-end credit disbursements nearing the festive season aided demand for funds, dealers said. "We have credit disbursements for the quarter-end in these last 10 days so we can see less and less participation at VRRRs now," a dealer at a state-owned bank said. As traders expected, the RBI has been reducing the size of its daily VRRRs amid a liquidity drain through tax payments and intervention in the foreign exchange market. 

 

On Friday, the three-day call rate ended at 5.25%, against 5.10% at Thursday's close for one-day loans. The weighted average call rate was 5.09% Friday, up from 5.05% Thursday. Volume in the three-day call money contract was INR 121.90 billion, against INR 124.39 billion for the one-day contract Thursday. The three-day tri-party repo rate ended at 5.30% Friday, up from 5.02% for one-day loans Thursday. The weighted average rate was at 5.07% Friday, up from 4.95% Thursday. Volume in the three-day contract was INR 5.12 trillion, compared with INR 5.44 trillion in the one-day contract Thursday.

 

OUTLOOK

On Saturday, the two-day call money rate is seen near the RBI's Standing Deposit Facility rate of 5.00% in thin trade, as is usually seen on Saturdays. However, outflows for goods and services tax beginning Monday are likely to put upward pressure on rates, while outflows for settlement of the central bank's intervention in the foreign exchange market are likely to continue to drain liquidity, dealers said. Monday onwards, payments of about INR 1.8 trillion will begin for goods and services tax. Monday is also the last day of the initial public offering of the National Stock Exchange of India Ltd., which is the day likely to see the highest participation from institutional investors, adding to upward pressure on overnight borrowing rates, dealers said.

 

As expected, the RBI reduced the size of daily VRRR auctions. The RBI will conduct an overnight VRRR of INR 1 trillion Monday, against the INR-2.25-trillion operation it held Friday and INR-3-trillion auction it held Thursday. Some market participants expect the RBI to conduct more open-market operations auctions to sell gilts after announcing INR 1 trillion worth of such sales for September. Dealers expect the two-day call rate to be at 4.50–5.20% Saturday, while the two-day tri-party repo rate is seen at 4.50-5.10%.

 

CALL RATE

5.25%--Friday close for three-day loans

5.10%--Friday open for three-day loans

5.10%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.10	5.09
3-day	--	--
14-day	5.82	5.82
1-month	5.92	5.92
3-month	6.32	6.32

 

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India Call: At repo; TREPs ends above repo rate on funding demand for IPOs

 

MUMBAI – The three-day interbank call money rate was at the Reserve Bank of India's policy rate of 5.25% and the tri-party repo rate ended above the RBI's repo rate due to demand for funds amid aggressive bidding at initial public offerings, dealers said. The weighted average rate in the tri-party repo market ended above the floor rate, the first time in the last two weeks.    

 

At 1801 IST, the three-day call rate was 5.25%, up from 5.10% on Thursday for one-day loans. The weighted average call rate was 5.09%, against 5.05% Thursday. Trade volume in the same call money contract was INR 121.90 billion, up from INR 124.08 billion at 1730 IST Thursday.

 

The tri-party repo rate for three-day loans ended at 5.30% Friday, sharply higher than 5.02% Thursday. The tri-party repo rate for three-day loans ended at 5.30%, the highest closing level since Jul. 28, which was for one-day loans. Three-day rates on Fridays and other weekdays are not comparable as they are the most widely traded contracts before the weekend. The weighted average tri-party repo rate was 5.07% Friday, up from 4.95% Thursday. Volume in the same contract was INR 5.12 trillion, down from INR 5.44 trillion Thursday. 

 

"Subscription in SS Retail, Jindal (Supreme (India)), and Hero (Motors) IPOs are very high as today (Friday) is the last day," a dealer at a small-finance bank said. "Market is borrowing to invest in IPOs, we can see oversubscription by QIBs (qualified institutional buyers) in these IPOs," the dealer said. 

 

At the time of writing the copy, SS Retail Ltd.'s IPO was subscribed 203.61 times by qualified institutional buyers. Similarly, Jindal Supreme India Ltd.'s IPO was subscribed 126.41 times by institutional bidders and Hero Motors Ltd's IPO was 1.49 times subscribed.  

 

Some dealers said a few mutual funds were borrowing in the tri-party repo market due to funding requirements for IPOs, which pushed the tri-party repo rate to 5.50% during the day. It is the first time since Aug. 28, that the three-day borrowing rate in the secured market rose to the ceiling rate of the RBI's Liquidity Adjustment Facility corridor.    

Dealers now expect the RBI to reduce the size of the daily variable rate reverse repo auctions to INR 2 trillion or INR 1.5 trillion from around INR 2.5 trillion. This is mainly due to scheduled outflows of around INR 1.8 trillion for payments of goods and services tax Monday, dealers said. Going forward, the next two tranches of the INR-1-trillion open market operations auction for sale of gilts by the RBI and strong demand for IPOs are likely to push overnight borrowing rates higher, dealers said.

 

Dealers expect the tri-party repo rate to open at 5.10% Monday, above the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to outflows for GST payments. They expect the call money rate to open at 5.20-5.25% Monday.  (J. Navya Sruthi)

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India Call: Above RBI's SDF; weighted avg rate up as liquidity surplus down

 

MUMBAI – The interbank call money rate for three-day loans was steady and above the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as the liquidity surplus remained at the lowest since Aug. 31, dealers said. The tri-party repo rate was also above the floor rate due to the RBI's continuous variable rate reverse repo auctions and sale of gilts through open market operations auction of INR 500 billion later Friday.

 

"There was intervention in spot market yesterday (Thursday), the impact will be seen on Monday (as it is T+2 delivery). Liquidity surplus reduced because of intervention by RBI on Sept. 15 which was seen yesterday (Thursday)," a dealer at a private-sector bank said. The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 6.94 trillion Thursday, down from INR 7.38 trillion Wednesday. Cash balances with the RBI, however, rose to INR 8.35 trillion Thursday from INR 8.16 trillion Wednesday, which also led to a lower liquidity surplus Thursday. Cash balances were higher than the daily average requirement of INR 8.22 trillion for the fortnight ending Sept. 30.   

 

Following this fall in liquidity surplus, the RBI has reduced the size of the three-day VRRR auction to INR 2.25 trillion from INR 2.5 trillion on an overnight basis conducted on Thursday, dealers said. Usually, three-day VRRR auctions are considered to be on an overnight basis as the volume in call money and tri-party repo markets is likely to be lower on Saturday and markets will be shut on Sunday.    

 

At the three-day VRRR auction for INR 2.25 trillion Friday, market participants expect offers worth INR 1.69 trillion, according to the median of an Informist poll. Participants expect total offers between INR 1.13 trillion and INR 2.25 trillion at the auction.

 

"People need money so they are withdrawing from long-term VRRRs conducted earlier this month," a dealer at a small-finance bank said. According to the RBI, the outstanding VRRR amount of the two long-term VRRR auctions conducted earlier this month fell by INR 190 billion from INR 3.15 trillion Wednesday. The outstanding amount in the 26-day VRRR auction fell to INR 554.50 billion Thursday from INR 604.50 billion Wednesday. The outstanding amount in the 30-day VRRR auction fell to INR 2.41 trillion Thursday from INR 2.55 trillion Wednesday.   

 

Going forward, dealers expect the RBI to continue with overnight VRRR auctions due to scheduled outflows of INR 1.80 trillion for goods and services tax payments and the next two tranches of the INR-1.00-trillion open market operations auction to sell government bonds for INR 250 billion each later next week.   

 

At 1022 IST, the three-day call rate was 5.10%, unchanged from Thursday for one-day loans. The weighted average call rate was 5.10%, against 5.05% Thursday. The trade volume in the same call money contract was INR 39.87 billion, against INR 20.90 billion at 1030 IST Thursday. The three-day tri-party repo rate was 5.04%, compared to 5.02% Thursday for one-day loans. The weighted average rate was 5.02%, against 4.95% Thursday. The volume on the same contract was INR 3.06 trillion at the same time, against INR 3.09 billion at 1030 IST Thursday.  (J. Navya Sruthi)

 

End

 

US$1 = INR 95.8725

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

 

Edited by Avishek Dutta

 

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