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[I] India Call: Ends near repo on banks' demand for funds for quarter-end credit

 

Informist, Friday, Sept. 25, 2026

 

By Aaryan Khanna

 

NEW DELHI – The three-day interbank call money rate ended near the Reserve Bank of India's repo rate amid demand for funds ahead of the weekend, dealers said. The weighted average call rate rose as banks looked to borrow funds to maximise credit growth before the end of the September quarter, with Sunday working ahead of the three-day bank strike from Monday to Wednesday.

 

Loan disbursals have bunched up to this week and Sunday due to the strike, which has led banks to remain conservative in deploying cash, dealers said. The RBI accepted all offers worth INR 902.80 billion at the INR-1.50-trillion, three-day variable rate reverse repo auction at 0930-1000 IST Friday.

 

The tri-party repo rate for three-day loans ended at 5.45%, up from 5.11% at the opening and 5.00% Thursday for one-day loans. The weighted average rate was at 5.11%, up from 5.09% Thursday. The volume in the three-day contract was INR 5.07 trillion, down from INR 5.41 trillion for the one-day contract Thursday.

 

"The liquidity in the banking system is skewed as well. Some of the PSU banks have the ability to lend, and they are doing that," a dealer at a private-sector bank said. "But for smaller banks, liquidity conditions have changed very quickly and even in TREPS these days the lenders are not very active."

 

The RBI's net liquidity absorbed – a proxy for the liquidity surplus in the banking system – was INR 4.27 trillion Thursday, down from INR 4.34 trillion Wednesday, as banks increased their cash balances with the RBI to INR 8.20 trillion Thursday from INR 8.11 trillion the previous day. While the surplus remained comfortable, steady demand from banks and usual outflows from mutual funds pushed both secured and unsecured money market rates above the policy repo rate Friday.

 

The three-day call rate ended at 5.20% Friday, down from 5.25% at the open and at Thursday's close for one-day loans. The weighted average call rate was 5.20%, up from 5.12%. The volume in the three-day call money contract was INR 131.11 billion, down from INR 199.16 billion transacted in one-day loans Thursday.

 

OUTLOOK

Money markets are shut Saturday. On Monday, the one-day call money rate is expected to open near the RBI's repo rate of 5.25% due to early demand for funds from primary dealers amid the bank strike, dealers said. The large liquidity surplus in the banking system and inflows from the government's month-end spending may cap overnight rates.

 

The RBI will conduct an overnight VRRR auction of INR 2.00 trillion at 0930-1000 IST Monday. Traders do not expect a large subscription at the auction because of banks' month-end and quarter-end funding needs, dealers 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% Monday, while the one-day tri-party repo rate is seen at 4.50-5.30%.

 

CALL RATE

5.20%--Friday close for three-day loans

5.25%--Friday open for three-day loans

5.25%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India Ltd.:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.22	5.13
3-day	--	--
14-day	5.82	5.82
1-month	5.93	5.92
3-month	6.31	6.31

 

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India Call: Below SDF; TREPs near repo on fewer lenders, credit disbursal

 

MUMBAI – The three-day call money rate was below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% as demand for funds was reduced after borrowing in early trade, dealers said. They expect the call rate to remain at the lower end of the Liquidity Adjustment Facility corridor. However, the tri-party repo rate rose to near the policy repo rate of 5.25% due to fewer lenders in the secured market, dealers said.

 

"We borrowed at 5.10% in the morning, but it was just partial borrowing. Now we are waiting for rates to fall to borrow again," a dealer at a primary dealership said. "There are not many lenders in the market today (Friday)," the dealer added.

 

At 1458 IST, the tri-party repo rate for three-day loans was at 5.20%, up from 5.11% at the opening and 5.00% Thursday for one-day loans. The weighted average rate was at 5.11%, up from 5.09% Thursday. The volume in the three-day contract was INR 4.48 trillion, against INR 4.65 trillion at 1430 IST Thursday.

 

Along with fewer lenders in the tri-party repo market, there was also demand for funds due to month-end and quarter-end credit disbursements. "From Wednesday quarter-end disbursements have started, these were scheduled for next week, but customers preponed (advanced) them because of the bank strike," a dealer at a state-owned bank said.

 

However, the three-day call rate was at 4.80%, down from 5.25% Wednesday for one-day loans. The weighted average call rate was 5.20%, up from 5.12%. The volume in the three-day call money contract was INR 91.39 billion, against INR 148.46 billion at 1430 IST Thursday. Dealers said that even though there was demand for funds, the ample liquidity surplus in the banking system kept the overnight borrowing rates near the floor rate for most of the trading session.

 

The RBI's net liquidity absorbed--a proxy for the liquidity surplus in the banking system--was INR 4.27 trillion Thursday, down from INR 4.34 trillion Wednesday, as banks increased their cash balances with the RBI to INR 8.20 trillion Thursday from INR 8.11 trillion the previous day.

 

Systemic liquidity is set to get an early boost after the Centre Wednesday said it will pay salaries and pensions Friday, advancing its expenditure from the end of the month due to a three-day bank strike starting Monday. Most dealers expect the month-end inflows to start by the end of Friday, while some dealers said part of the inflows have already started.

At Friday's three-day INR 1.50-trillion variable rate reverse repo auction, the RBI took all offers amounting to INR 902.80 billion. With early government spending this month and more than 1% of the net demand and time liabilities, the RBI will be continuing with the daily reverse repo operations to keep the weighted average call rate near the policy rate, dealers said.  (J. Navya Sruthi)

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India Call: Near repo rate on early demand for funds, credit offtake

 

MUMBAI – The three-day interbank call money rate was near the Reserve Bank of India's repo rate of 5.25% Friday due to early demand for funds from primary dealerships and quarter-end credit disbursements demand, dealers said. However, the tri-party repo rate was near the RBI's Standing Deposit Facility rate of 5.00% due to a comfortable liquidity surplus in the banking system on Thursday even as it reduced slightly from Wednesday.

 

At 1008 IST, the three-day call rate was at 5.20%, down from 5.25% Wednesday for one-day loans. The weighted average call rate was 5.25%, up from 5.12%. The volume in the three-day call money contract was INR 8.63 billion, against INR 34.99 billion at 1030 IST Thursday. The three-day tri-party repo rate was at 5.10%, up from 5.00% Thursday for one-day loans. The weighted average rate was at 5.09%, the same as Thursday. The volume in the three-day contract was INR 2.24 trillion, against INR 3.07 trillion at 1030 IST Thursday.

 

Systemic liquidity is set to get an early boost after the Centre Wednesday said it will pay salaries and pensions Friday, advancing its expenditure from the end of the month due to a three-day bank strike starting Monday. However, some banks expect the inflows to reflect in the banking system on either Friday or Sunday. 

 

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was at INR 4.27 trillion Thursday, down from INR 4.34 trillion Wednesday as banks increased their cash balances with the RBI to INR 8.20 trillion Thursday from INR 8.11 trillion Wednesday.

 

Owing to these advance inflows from the government, the RBI has raised the size of Friday's variable rate reverse repo auction to INR 1.50 trillion from INR 1.25 trillion Thursday and around INR 750 billion earlier. Most dealers expect the VRRR auction to be almost 70% subscribed. According to an Informist poll, market participants expect INR 750 billion to INR 1.30 trillion subscriptions at the overnight VRRR auction Thursday, with a median at INR 1 trillion at a cut-off of 5.24%.

 

Market participants, those who expected below INR 1 trillion, said there would be a demand for funds to meet month-end and quarter-end credit disbursements. "Banks will be working on Sunday because of the strike, so there will be credit disbursements that day," a dealer at a state-owned bank said. "So there might be low subscription...but let's see, so far there are no month-end inflows," the dealer said.

 

Moreover, most banks have chosen the pre-payment option of the longer-term VRRR auctions. As of Thursday, INR 1.29 trillion was outstanding with the RBI compared to the subscription of INR 2.59 trillion at the 30-day VRRR auction conducted on Sept. 7. Similarly, the outstanding amount with the RBI parked through the 26-day VRRR auction was INR 394.50 billion, against INR 604.49 billion at the subscription. (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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