Informist, Saturday, Dec 2, 2023

By Subhana Shaikh

MUMBAI – The interbank call money rate ended above the Reserve Bank of India's repo rate of 6.50% today because of likely demand for funds from banks amid a liquidity deficit in the banking system, dealers said.

The two-day call money rate ended at 6.65% today, against 6.75% for three-day loans on Friday.

As is usually the case on Saturdays, trade volumes remained muted, as banks met their cash requirements Friday, dealers said. A total of 50 deals worth 10.30 bln rupees were struck today, according to data from Clearing Corp of India.

At the end of trade on Thursday, liquidity in the banking system was in a deficit of 487.55 bln rupees, as against 1.04 trln rupees on Wednesday, according to the RBI data. The deficit in the banking system eased due to the inflows of around 500 bln rupees received on Thursday on account of the government's month-end spending, dealers said. 

Moreover, during the day, the banking system received inflows on account of month-end spending, dealers said. Inflows in the form of the government's month-end spending are expected to add approximately 1.5 trln rupees in total to the banking system's liquidity.

On Friday, banks parked only 224.68 bln rupees, out of the notified amount of 500 bln rupees, at the 14-day variable rate reverse repo auction, which will be reversed on Dec 15. 

OUTLOOK

* On Monday, the call money rate may open above RBI's marginal standing facility rate of 6.75% due to strong demand for funds from banks early in trade amid a liquidity deficit.

* During the day, the one-day call rate is seen at 6.25-6.90%, dealers said.

CALL RATE

6.65%--Today's close for two-day loans

6.10%--Today's open for two-day loans

6.75%--Friday's close for three-day loans

End

Edited by Aditya Sakorkar

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