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Informist, Wednesday, Jul. 1, 2026

 

By Durgesh Nandan

 

MUMBAI – The one-day interbank call money rate Wednesday ended at its lowest in nearly seven weeks, well below the Reserve Bank of India's Standing Deposit facility rate of 5.00% as systemic liquidity returned to a surplus Tuesday after eight days of deficit. Demand for funds from banks also eased at the beginning of a new reporting fortnight and quarter, dealers said.

 

The one-day call money rate ended at 4.60%, its lowest closing level since May 14 and down from 5.45% Tuesday. The weighted average call rate was at 5.28%, sharply lower than 5.43% Tuesday. The call money market turnover was INR 211.16 billion, nearly doubling from INR 122.88 billion Tuesday. For the day, the call rate moved in the range of 4.20–5.40% and the tri-party repo rate was in 5.00-5.34?nd, remaining within the Liquidity Adjustment Facility corridor a day after jumping above the Marginal Standing Facility rate multiple times. 

 

The one-day tri-party repo rate ended at 5.25%, down sharply from 5.55% Tuesday. The weighted average rate fell to 5.22% from 5.39% Tuesday. The volume in the overnight contract was INR 5.07 trillion, compared with INR 4.33 trillion Tuesday. 

 

Volumes rose in money markets after the June quarter ended and lenders became more active, with secured and unsecured lending proving to be a challenge for quarterly accounting, dealers said. 

 

The net liquidity absorbed by the RBI--a proxy for the systemic liquidity surplus--was INR 1.13 trillion Tuesday, compared with a net injection of INR 130.76 billion Monday, according to latest data. The return to a surplus came after robust spending from the government at the end of June, which may drive the RBI's net liquidity absorbed to INR 1.5 trillion by the end of the week after the flows end, dealers said. The RBI net liquidity injection reflected a deficit in the banking system, which had persisted since Jun. 21. 

 

The central bank conducted a two-day variable rate repo auction at 0930-1000 IST for INR 1.25 trillion, which got only 24% subscription of its notified amount. This was despite the maturity of two VRR auctions worth INR 1.44 trillion Wednesday. "The VRR was not subscribed as market expected the tri-party repo rate to cool down later in the day, so they could borrow from this market," a dealer at a private-sector bank said.

 

The central bank is unlikely to conduct more liquidity injections this week, with liquidity conditions and money market rates easing, dealers said. Scheduled tax deducted at source payments will only drain liquidity from the banking system towards the end of next week, they said. "If some forex intervention (spot dollar sales) happens, only then we can see a VRR (auction), otherwise there is no possibility of VRR from the RBI, at least for this week," a dealer at a public-sector bank said.

 

OUTLOOK

On Thursday, the one-day interbank call money rate is expected to open around the RBI's repo rate of 5.25% on funding requirements from primary dealerships and some banks to meet routine payments, dealers said. Dealers said rates in the money market are expected to be around the repo rate and are likely to cool down by the end of the week due to a lack of major scheduled outflows. "This week we expect the weighted average call rate to fall below repo rate as there is nothing much scheduled till next week," the dealer at the state-owned bank said. 

 

Dealers expect the call rate to be at 4.60–5.45% Thursday. The tri-party repo rate is expected to be in the 4.90–5.45?nd. The weighted average call rate is expected to be in the 5.25–5.35?nd, and that of the tri-party repo market is likely to be in the 5.20–5.30?nd, they said.

 

CALL RATE

4.60%--Wednesday close for one-day loans

5.30%--Wednesday open for one-day loans

5.45%--Tuesday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	WEDNESDAY	TUESDAY
Overnight	5.31	5.50
3-day	--	--
14-day	5.89	6.01
1-month	6.13	6.20
3-month	6.56	6.61

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India Call: Falls below repo rate as govt spending boosts liquidity

 

MUMBAI – The one-day interbank call money rate fell from its opening level and traded below the Reserve Bank of India's repo rate of 5.25% as demand for funds was subdued after liquidity in the banking system improved due to the government's expenditure for salaries and pension payouts, dealers said. Anticipation of further expenditure by the government also kept money market rates from rising to the upper end of the Liquidity Adjustment Facility corridor, they said.  

 

"Rates are likely to remain soft through the day as government month-end spending is injecting liquidity into the banking system. Around INR 1.3 trillion flowed into the system Tuesday, and another sizeable amount is expected Wednesday," a dealer at a private sector bank said. The net liquidity absorbed by the RBI--a proxy for the systemic liquidity surplus--was INR 1.13 trillion Tuesday, compared with a net injection of INR 130.76 billion Monday, according to latest data.

 

The RBI conducted a two-day variable rate repo auction of INR 1.25 trillion earlier in the day and accepted all bids received. The auction was poorly subscribed, with bids amounting to only INR 296.95 billion. Dealers attributed the poor subscription to relatively cheaper funding available in the tri-party repo market at the time of the auction. The tri-party repo rate was in the 5.16-5.22% range, around or below the repo rate, making it a more attractive source of funding than the RBI's VRR window, where the cut-off rate is required to be above the repo rate. 

 

"There is some demand for funds from both private and public sector banks as banks typically witness CASA (current account and saving account) outflows in the first week after the quarter-end," a dealer at a public-sector bank said. 

 

At 1353 IST, the one-day call rate was at 5.10%, lower than 5.30% at open and also lower than 5.45% at Tuesday's close. The weighted average call rate was 5.30%, down from 5.43% Tuesday. At 1353 IST, the trade volume in the overnight contract was INR 158.53 billion, higher than INR 85.42 billion at 1330 IST Tuesday. The volume was higher compared to Tuesday as the VRR auction saw low participation, dealers said.

 

At 1353 IST, the one-day tri-party rate was 5.26%, higher than 5.21% at open, but down from 5.55% at Tuesday's close. The weighted average tri-party rate was 5.22%, lower than 5.39% Tuesday. At 1353 IST, the trade volume was INR 3.78 trillion, higher than INR 2.91 trillion at 1330 IST Tuesday. (Shumaila Firoz) 

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India Call: Edges lower remains but above repo on INR-1.44-tln VRR reversal

 

The one-day interbank call money rate edged lower Wednesday but remained above the Reserve Bank of India's repo rate of 5.25% on early demand for funds from primary dealerships and banks to meet regular payment obligations, dealers said. The liquidity in the banking system turned surplus after eight consecutive days of being in deficit due to tax payments.

 

The RBI conducted a third variable rate repo auction this week for a two-day tenure on Wednesday for a notified size of INR 1.25 trillion. Subscription is seen at INR 500 billion at a cut-off of 5.26%, according to an Informist Poll median of 11 market participants. Dealers expect the VRR auction to be poorly subscribed as the current tri-party repo rate is trading lower than the minimum cut-off rate of 5.26% at the auction. The RBI conducted the VRR to offset the impact of reversal of INR 1.44 trillion from two VRR auctions it conducted earlier this week. The central bank conducted the auction to limit the rise in rates in the money market to the upper-end of the Liquidity Adjustment Facility corridor, dealers said.

 

The net liquidity absorbed by the RBI--a proxy for the systemic liquidity surplus--was INR 1.13 trillion Tuesday, compared with a net injection of INR 130.76 billion Monday, according to latest data. The injection reflects a deficit. The surplus liquidity increased due to inflows from the central government of around INR 1 trillion in the form of salaries and pension payments, dealers said. Funds parked at the RBI's Standing Deposit Facility rose to INR 2.77 trillion Tuesday from INR 2.17 trillion Monday.

 

"The SDF amount rose sharply as banks usually don't want to lend during the quarter-end, so they have parked it in the SDF at the end of the day," a dealer at a private-sector bank said. "The surplus liquidity will increase more as month-end spending (from central government) has not transferred fully yet."

 

At 0930 IST, the one-day call money rate was 5.30%, down from 5.45% Tuesday. The weighted average call rate was also 5.30%, lower than 5.43% Tuesday. The traded volume in the call money market was INR 10.50 billion, up from INR 5.86 billion at 0930 IST Tuesday. At 0930 IST, the one-day tri-party repo rate was 5.19%, sharply down from 5.55% Tuesday. The weighted average rate was 5.18%, lower than 5.39% the previous day. The turnover in the tri-party repo market was INR 1.36 trillion, sharply higher than INR 518.04 billion at 0930 IST Tuesday. For the rest of the day, the call rate is expected to be in the range of 4.60-5.50%.  (Durgesh Nandan) 

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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