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Informist, Friday, Jul. 24, 2026

By Cassandra Carvalho

MUMBAI – The three-day interbank call money rate ended below the Reserve Bank of India's repo rate Friday as systemic liquidity improved due to inflows from foreign currency non-resident bank deposits and expenditure by the Centre, dealers said. The overnight Mumbai Interbank Outright Rate was set at its lowest since Apr. 27, and below the repo rate for the first time since May 18. The weighted average call rate was also the lowest since Apr. 27 barring Saturdays. 

Systemic liquidity saw a boost due to some expenditure for government schemes, dealers said. Moreover, banks received inflows through foreign currency non-resident bank deposits, dealers said. "Some banks had the swap facility scheduled for Tuesday, and it's a T+2 settlement, so the inflows came on Thursday," a dealer at a state-owned bank said.

Two variable rate repo operations totalling INR 414.90 billion reversed Friday, inspite of which money market rates remained below the repo rate for most of the session. Mutual funds had ample funds to lend in the tri-party repo market, dealers said. The weighted average tri-party repo rate was near the Standing Deposit Facility rate of 5.00%.

The three-day call money rate ended at 5.12% Friday, down from 5.28% for one-day loans Thursday. The weighted average call rate was 5.12%, down from 5.28% Thursday. The volume in the market was INR 211.42 billion Friday, higher than INR 156.40 billion the previous session. The three-day tri-party repo rate ended at 5.04%, slightly higher than 4.95% for one-day loans Thursday. The weighted average rate was 5.05%, inching higher from the previous day's 5.02%. The volume in the TREPS market was INR 4.81 trillion, higher than INR 4.77 trillion in the previous session.

OUTLOOK

Indian money markets are shut Saturday. On Monday, the one-day interbank call money rate is seen opening near the RBI's repo rate of 5.25% on early funding requirements from primary dealerships on payment of INR 280 billion for gilts purchased at the weekly auction Friday. However, the rate may fall below repo rate later in the day amid inflows through foreign currency non-resident bank deposits with no major outflow for the next few sessions.

Some traders were expecting the RBI to conduct a variable-rate repo auction Monday due to the reversal of a seven-day repo of INR 720.51 billion. Post market hours, the central bank said it would conduct a three-day VRR for INR 750 billion Monday. Traders had expected VRRs until the Centre's major expenditure, in the form of salaries and pension payouts, begin by the end of the month. Traders will also assess the drain on rupee liquidity due to the RBI's dollar sales in the foreign exchange spot market. 

Traders do not expect the RBI to conduct any measures to infuse durable liquidity amid inflows from foreign non-currency resident bank deposits. Dealers expect the call rate at 4.60–5.25% Monday. The tri-party repo rate is expected to be in the 4.60–5.20% band. The weighted average call rate is expected to be in the 5.10–5.25% band, and that in the tri-party repo market is likely to be in the 5.00–5.25% band, they said.

CALL RATE

5.12%--Friday close for three-day loans

5.15%--Friday open for three-day loans

5.28%--Thursday close for one-day loans

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

India Call: Below SDF; tri-party rate ends down on ample liquidity with MFs

MUMBAI – The interbank call money rate for three-day loans was below the Reserve Bank of India's Standing Deposit Facility rate of 5.00%, while the tri-party repo market rate ended slightly above the SDF rate. The fall in call money rate was mainly due to inflows from the government's spending on some schemes, dealers said.  

"Banks received flows through government spending and these are translated into mutual fund schemes," a dealer at a private sector bank said. "So mutual funds are lending at lower rates," the dealer said. Some dealers also said that banks were not actively borrowing in the overnight market amid inflows into foreign currency non-resident bank deposits.

At 1632 IST, the three-day call rate was 4.85%, sharply lower than 5.28% for one-day loans Thursday. The weighted average call rate was 5.13%, lower than 5.28% Thursday. The volume at 1632 IST was INR 146.16 billion, compared with INR 135.21 billion at 1630 IST Thursday.

The tri-party repo rate for three-day loans ended at 5.04%, up from 4.95% for one-day loans Thursday. The weighted average rate was 5.05%, compared to 5.02% Thursday. The volume in the tri-party market was INR 4.78 trillion, compared with INR 4.73 trillion Thursday.

The RBI's net liquidity absorbed – a proxy for the systemic liquidity surplus – was INR 571.21 billion Thursday, against INR 28.84 billion Wednesday. Banks reduced their cash balances with the RBI to INR 7.95 trillion from INR 8.19 trillion on the previous day. This was below the average daily requirement of INR 8.16 trillion for the reporting fortnight ending Jul. 31.

"Two to three IPOs (initial public offerings) were done and funds were freed this week... so probably they (mutual funds) are dumping that in TREPS (tri-party repo market)," a dealer at another private sector bank said.  (J. Navya Sruthi)  

India Call: Below repo rate on low demand for funds, ample funds with MFs

The interbank call money rate for three-day loans was below the Reserve Bank of India's repo rate of 5.25% due to low demand for funds from banks and ample liquidity with mutual funds, dealers said. The tri-party repo rate for three-day loans was near the central bank's Standing Deposit Facility of 5.00% due to lower borrowing requirement, dealers said. 

"Mutual funds got flows probably, they must have booked profits in equities and dumped those here (tri-party repo market)... this led to more borrowing yesterday (Thursday) which is why SDF is high (funds parked by banks at RBI's Standing Deposit Facility)," a dealer at a small finance bank said. "Also, there are active VRRs (money infused through multiple variable rate repo auctions), leading to low borrowing from banks," the deal said.   

At 1032 IST, the three-day call rate was 5.15%, lower than 5.28% for one-day loans Thursday. The weighted average call rate was 5.15%, lower than 5.28% Thursday. The volume at the same time was INR 85.85 billion, compared with INR 64.15 billion at 1030 IST Thursday.

At 1033 IST, the tri-party repo rate for three-day loans was 5.08%, lower than 5.28% for one-day loans Thursday. The weighted average rate was 5.02%, unchanged from Thursday. The volume in the tri-party market at the same time was INR 2.79 trillion, compared with INR 2.40 trillion at 1030 IST Thursday.

The RBI's net liquidity absorbed – a proxy for the systemic liquidity surplus – was INR 571.21 billion Thursday, against INR 28.84 billion Wednesday. Banks reduced their cash balances with the RBI to INR 7.95 trillion from INR 8.19 trillion from the previous day. This was below the average daily requirement of INR 8.16 trillion for the reporting fortnight ending Jul. 31.

Dealers said only primary dealerships were seen borrowing in the call money market and demand for funds from banks was muted. Some dealers speculated that banks were not actively borrowing in the overnight market amid some inflows through foreign currency non-resident bank deposits.  (J. Navya Sruthi)

End

US$1 = INR 96.5625

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

Edited by Akul Nishant Akhoury

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