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Informist, Wednesday, Sept. 23, 2026

 

By Aaryan Khanna

 

NEW DELHI – The one-day interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate Wednesday. Demand for funds waned in the latter half of the session after goods and services tax payments ended, even as the weighted average call rate remained near the repo rate, dealers said.

 

Dealers said banks preferred to park funds at the RBI's overnight VRRR operations rather than in the SDF window at 5.00?ter the GST outflows, estimated at over INR 1.8 trillion, ended. Volumes under the SDF have risen for the last three days as banks held onto cash for the outflows. Funds parked with banks for the mammoth initial public offering of National Stock Exchange Ltd. also likely reversed during the day, pulling down the demand for funds in the latter half, dealers said.

 

"The liquidity number may still look large but around half of it is locked up with the RBI through the long-term VRRRs (variable rate reverse repo operations)," a dealer at a state-owned bank said. "So, on a day-to-day basis, some banks are facing some needs in the morning, though this is a temporary thing after GST. Already, things were looking a bit better today (Wednesday)."

 

On Wednesday, the one-day call rate ended at 4.90%, down from 5.30% at the opening but the same as Tuesday. The weighted average call rate was 5.21%, down from 5.24% in the last two sessions. The volume in the one-day call money contract was INR 118.13 billion, lower than INR 157.82 billion Tuesday.

 

The one-day tri-party repo rate ended at 4.90% Wednesday, lower than 5.15% at the open and similar to 4.92% at Tuesday's close. The weighted average rate was at 5.10% Wednesday, slightly down from 5.13% Tuesday. The volume in the one-day contract was INR 5.28 trillion, down from INR 5.52 trillion Tuesday.

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--fell further to INR 4.44 trillion Tuesday from INR 4.92 trillion Monday. The liquidity surplus has fallen to about 40% of its record high of INR 11.16 trillion which was seen earlier this month. Still, the RBI got offers of INR 879.93 billion at its overnight, INR-750-billion VRRR auction and accepted INR 750.26 billion at a cut-off rate of 5.24%.

 

OUTLOOK

On Thursday, the one-day call money rate is expected to open near the RBI's repo rate of 5.25%, as banks borrow for credit disbursement near the quarter-end. Outflows on account of the central bank's intervention in the foreign exchange market are likely to continue draining liquidity, dealers said.

 

The RBI will conduct an overnight VRRR of INR 1.25 trillion Thursday, which may not be fully subscribed, dealers said. Banks are likely to get an influx of liquidity by early next week from the government's month-end spending, they said.

 

Some market participants expect the RBI to conduct more open market operation auctions to sell gilts next month after announcing INR 1 trillion worth of such sales in September. Dealers expect the one-day call rate to be at 4.50–5.40% Thursday, while the one-day tri-party repo rate is seen at 4.50-5.30%.

 

CALL RATE

4.90%--Wednesday close for one-day loans

5.30%--Wednesday open for one-day loans

4.90%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.27	5.30
3-day	--	--
14-day	5.85	5.85
1-month	5.94	5.94
3-month	6.33	6.34

 

---

India Call: Above repo rate; liquidity surplus down to 40% of record high

 

MUMBAI – The one-day interbank call money rate traded above the Reserve Bank of India's repo rate on demand for funds nearing the end of the September quarter, with some funds also locked up in initial public offerings, dealers said. Traders said that some outflows due to the central bank's intervention in the foreign exchange market were likely, but that figure is not substantial, compared to large outflows seen last week.  

 

Funds parked under the RBI's Standing Deposit Facility rose for the third straight day Tuesday to INR 1.6 trillion, and cash balances fell slightly. The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--fell further to INR 4.44 trillion Tuesday, from INR 4.92 trillion Monday. The liquidity surplus has fallen to about 40% of its record high of INR 11.16 trillion which was seen earlier this month. The surplus has fallen all sessions since Sept. 13, barring a marginal rise Sunday.

 

Money market rates may cool later in the day with no major outflows scheduled for the day, dealers said. "IPO funds will get released today (Wednesday) so rates will come down in the second half," a dealer at a private-sector bank said. Funds locked up in the public issue of the National Stock Exchange of India Ltd. are due for release Wednesday.

 

At 0940 IST, the one-day call rate was 5.30%, up from 4.90% Tuesday. The weighted average call rate was 5.30%, against 5.24% Tuesday. The trade volume in the same call money contract was INR 9.96 billion, against INR 15.13 billion at 0930 IST Tuesday. At the same time, the one-day tri-party repo rate was 5.15%, compared to 4.92% Tuesday. The weighted average rate was 5.16%, against 5.13% Tuesday. The volume on the same contract was INR 1.9 trillion at the same time, against INR 1.2 trillion at 0930 IST Tuesday.  (Cassandra Carvalho)  End

 

US$1 = INR 95.74

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

 

Edited by Avishek Dutta

 

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