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Informist, Monday, Sept. 28, 2026

 

By Aaryan Khanna and Kabir Sharma

 

MUMBAI/NEW DELHI – The one-day call money rate ended a basis point below the standing deposit facility rate of 5.00% as demand for funds was low toward the end of trade, dealers said. The weighted average call rate fell as banks were carrying extra cash ahead of a proposed three-day strike through Wednesday, which would make daily funding more difficult, dealers said.

 

"Rates completely cooled off in the second half of the day as most banks had prepared for funds on Friday due to the strike," a dealer at a state-owned bank said. The one-day call rate ended at 4.99% Monday, down from 5.15% at the open and 5.20% at close for three-day loans on Friday. The weighted average call rate was 5.11%, down from 5.20%. Volume in the one-day call money contract was INR 173.68 billion, down from INR 131.11 billion transacted for three-day loans Friday.

 

The tri-party repo rate for one-day loans ended at 4.70%, down from 5.10% at the opening and 5.45% Friday for three-day loans. The weighted average rate was at 5.05%, down from 5.11% Friday. The volume in the contract was INR 5.38 trillion, up from INR 5.07 trillion for the three-day contract Friday.

 

"The tri-party repo rate also slipped below the SDF rate later on. This shows that demand wasn't really great, just a case where there is concentration of liquidity with certain banks," a dealer at a private-sector bank said. "Even at the (VRRR) auction, I would say the enthusiasm was normal. Nobody went overboard in subscription even for a day."

 

The RBI accepted all INR-1.12-trillion offers at its overnight, INR-2.00-trillion variable rate reverse repo auction. The reversal of Friday's VRRR returned INR 902.80 billion to banks on Monday, and some traders expected higher subscription as normal banking operations resumed. The bank unions deferred the three-day nationwide strike.

 

The net liquidity absorbed by the RBI – a proxy for the liquidity surplus in the banking system – rose to INR 4.61 trillion Friday from INR 4.27 trillion Thursday, before falling to INR 4.39 trillion by Sunday. The government disbursed salaries and pensions for September on Friday due to the proposed bank strike, adding around INR 500 billion in rupee liquidity to the banking system, dealers said. Banks increased their cash balances with the RBI over the weekend, leading to a slight decrease in surplus liquidity.

 

Some traders expect VRRR subscriptions to rise in the coming days as banking system liquidity rises further from the government's usual month-end spending, dealers said. However, this may only happen on Thursday as banks are looking to park funds in the Standing Deposit Facility window to ensure they have funds to meet robust credit demand. Dealers look ahead to further operations from the RBI to drain rupee liquidity, with some banks again mulling issuing certificates of deposit, dealers said. 

 

"There is a trend that at the quarter-end we see some outflows," a dealer at a mutual fund said. "I don't think anything out of the ordinary is happening here, but at the same time I personally felt there was no problem on the lending side even though the quarter is ending."

 

OUTLOOK

On Tuesday, 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 banks, dealers said. The large liquidity surplus in the banking system and inflows from the government's month-end spending may cap overnight rates.

 

"We are expecting more inflows in the next two-three days," a dealer at a state-owned bank said. "Another INR 2 trillion is expected to hit the system by Thursday due to state government spending." 

 

The RBI will conduct an overnight VRRR auction of INR 2.00 trillion at 0930-1000 IST Tuesday. Traders do not expect a large subscription at the auction because of banks' month-end and quarter-end funding needs, dealers said. Dealers expect the one-day call rate to be at 4.50–5.40% Tuesday, while the one-day tri-party repo rate is seen at 4.50-5.30%.

 

CALL RATE

4.99%--Monday close for one-day loans

5.15%--Monday open for one-day loans

5.20%--Friday close for three-day loans

 

BENCHMARK MIBOR (in %)

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

 

TENURE	MONDAY	FRIDAY
Overnight	5.14	5.22
3-day	--	--
14-day	5.80	5.82
1-month	5.93	5.93
3-month	6.31	6.31

---

India Call: Below repo rate as banks' excess cash helps meet PDs' demand

 

NEW DELHI – The one-day call money rate was below the Reserve Bank of India's repo rate of 5.25% as banks had adequate cash reserves to meet early demand for funds from primary dealers. Banks had held onto extra cash over the weekend anticipating a three-day strike from Mon-Wed, which was called off by unions only late on Sunday, dealers said.

 

At 1050 IST, the one-day call rate was at 5.15%, down from 5.20% Friday for three-day loans. The weighted average call rate was 5.14%, down from 5.20%. The volume in the one-day call money contract was INR 31.51 billion, up from INR 13.37 billion at 1030 IST Friday. The one-day tri-party repo rate was at 5.07%, down from 5.45% Friday for one-day loans. The weighted average rate was at 5.09%, easing slightly from 5.11% Friday. The volume in the one-day contract was INR 2.83 trillion, also higher than INR 2.46 trillion on the most-traded contract at 1030 IST Friday.

 

The RBI's net liquidity absorbed – a proxy for the liquidity surplus in the banking system – rose to INR 4.61 trillion Friday from INR 4.27 trillion Thursday, despite a slight rise in cash parked with the central bank to meet regulatory norms. The funds held under the Standing Deposit Facility rose overnight by INR 550 billion from the previous day to INR 2.18 trillion in the latest reading.

 

"Things are under control today as naturally everyone can built up a pile on Friday to deal with a sort-of five-day weekend (due to the bank strike," a dealer at a private-sector bank said. "Let's see how the VRRR changes things as I expect banks will be in a better mood to participate now that the strike is not happening."

 

The RBI accepted all INR-1.12-trillion offers at its overnight, INR-2.00-trillion variable rate reverse repo auction. The reversal of Friday's VRRR gave INR 902.80 billion back to banks Monday and traders had expected a higher subscription with both the return to normal banking operations and the advancement on government spending, dealers said. The government disbursed salaries and pensions for September on Friday instead of the last day of the month, the usual case, due to the scheduled bank strike.

 

While liquidity is expected to remain in a comfortable surplus, overnight money market rates are not seen below the Standing Deposit Facility rate of 5.00% consistently as banks meet credit disbursal targets at the month- and quarter-end, dealers said. The tri-party repo rate remained above the SDF rate Monday as mutual funds faced redemption pressure in liquid funds near the end of the month, as usually the case, they said.  End

 

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

 

Edited by Saji George Titus

 

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