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Informist, Tuesday, Aug. 18, 2026

 

By Aaryan Khanna

 

NEW DELHI – The one-day interbank call money rate ended below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Tuesday. Banks had enough surplus cash to meet daily needs despite parking over INR 2 trillion in various variable rate reverse repo auctions conducted by the RBI this week, keeping the demand for funds low in the interbank market, dealers said. Most banks were also constantly receiving foreign currency non-resident (banks) deposit inflows, improving their liquidity positions, they said. 

 

"There is no pressure on liquidity. Banks who were borrowing in the call market, when we see their requirements decrease, it is an automatic sign that they are getting FCNR(B) flows," a dealer at a state-owned bank said. "I don't think the situation will change in August even after GST (goods and services tax) outflows."

 

The one-day call rate ended at 4.90% Tuesday, down from 5.20% at the open and at Monday's close. The weighted average call rate was 5.11%, down from 5.18% Monday. The trade volume in the contract was INR 113.29 billion, down from INR 131.27 billion Monday.

The tri-party repo rate for one-day loans ended at 4.60% Tuesday, down from 5.01% at the open and 4.90% at Monday's close. The weighted average rate in the tri-party repo market eased to 4.97% from 5.02% Monday. The volume in the most-traded contract was INR 4.58 trillion, up from INR 4.29 trillion Monday.

 

The RBI's attempts to prop up overnight rates had a limited impact as both auctions were undersubscribed, with banks holding onto liquidity to meet credit disbursal needs and cash balances with the central bank, dealers said. The central bank accepted all offers worth INR 827.88 billion at its first overnight auction for INR 1.50 trillion held from 0930-1000 IST. It then conducted another VRRR auction for INR 750 billion from 1200-1230 IST, accepting offers worth INR 365.95 billion. The cut-offs at both auctions were 5.24%.

 

The net liquidity absorbed by the RBI – an indicator of the liquidity surplus – was steady at INR 3.63 trillion Monday, compared with INR 3.64 trillion Sunday. The liquidity drain from the settlement of the INR-320-billion gilt auction was likely offset by banks converting dollar deposits to rupees under the RBI's special scheme, dealers said. However, the RBI's heavy dollar sales in the spot market were keeping surplus liquidity in check, they said. 

 

OUTLOOK

On Wednesday, the one-day interbank 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. The RBI will conduct an overnight VRRR auction for INR 1.50 trillion at 0930-1000 IST Wednesday, which should be subscribed for around INR 1.2 trillion as banks roll over two maturing tenders, dealers said.

 

Traders have begun watching for any drain in liquidity through currency in circulation ahead of the festival season. Monthly goods and services tax outflows are expected to drain around INR 1.8 trillion of liquidity starting Friday, which may reduce subscriptions at VRRR auctions and push up the weighted average call rate toward the repo rate, dealers said.

 

Dealers expect the one-day call rate at 4.60–5.30% on Wednesday. The one-day tri-party repo rate is expected to be in the 4.50–5.20?nd. The weighted average call rate is expected to be in the 5.05–5.20?nd, and the tri-party repo rate is likely to be 4.90-5.15%, dealers said.

 

CALL RATE

4.90%--Tuesday close for one-day loans

5.20%--Tuesday open for one-day loans

5.20%--Monday close for one-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	MONDAY
Overnight	5.16	5.24
3-day	--	--
14-day	5.80	5.82
1-month	6.05	6.06
3-month	6.54	6.55

 

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India Call: Below RBI's SDF rate on low demand for funds, ample liquidity

 

NEW DELHI – The one-day interbank call money rate slipped to the Reserve Bank of India's Standing Deposit Facility rate of 5.00% due to low demand for funds amid an ample liquidity surplus, dealers said. Two overnight variable rate reverse repo auctions failed to materially prop up overnight money market rates, with the weighted average tri-party repo rate below the Liquidity Adjustment Facility corridor. 

 

At 1720 IST, the one-day call rate was 4.85%, down from 5.20% at the open and at Monday's close. The weighted average call rate was 5.13%, down from 5.18% Monday. The trade volume in the contract was INR 113.07 billion, down from INR 122.91 billion at 1630 IST Monday.

The tri-party repo rate for one-day loans ended at 4.60% Tuesday, down from 5.01% at the open and 4.90% at Monday's close. The weighted average rate in the tri-party repo market eased to 5.02% from 5.06% Friday. The volume in the most-traded contract was INR 4.58 trillion, up from INR 4.29 trillion Friday.

 

The net liquidity absorbed by the RBI--an indicator of the liquidity surplus--was steady at INR 3.63 trillion Monday from INR 3.64 trillion Sunday. The central bank accepted all offers worth INR 827.88 billion at its first overnight auction for INR 1.50 trillion at 0930-1000 IST. It then announced and conducted another VRRR auction for INR 750 billion at 1200-1230 IST, where it accepted offers worth INR 365.95 billion.

 

The cut-offs at both auctions were 5.24%. Some traders said the second auction may have been conducted to allow a large bank which missed out on the first auction, while others interpreted it as a signal from the RBI that it wanted the weighted average call rate to align with the policy repo rate of 5.25% rather than slipping to the lower end of the LAF corridor of 5.00%, dealers said.

 

"Around half of the liquidity in the banking system is parked with the RBI and they want more," a dealer at a state-owned bank said. "I think this shows the concern that the RBI is not comfortable with (money market) rates at these levels on a consistent basis and wants the market to trade around the repo rate."  (Aaryan Khanna)

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India Call: Below repo rate on low demand for funds, surplus liquidity

 

MUMBAI – The one-day interbank call money rate was below the Reserve Bank of India's repo rate amid low demand for funds and surplus liquidity. There were no major initial public offerings lined up that required keeping aside funds, dealers said. Until goods and services tax outflows begin at the end of this week, there is little demand for funds in overnight markets, dealers said. However, some banks were cautious in deploying funds ahead of the tax payments and after the shortened window to mobilise foreign currency non-resident (bank) deposits of three- to five-year tenures lowered calculations of expected liquidity, they said.

 

At 0945 IST, the one-day call rate was at 5.20%, the same as its opening level and Monday's close. The weighted average call rate was 5.16%, down from 5.18% Monday. The trade volume on the same contract was INR 23.69 billion from INR 2.0 billion at 0930 IST Monday. At 0945 IST, the one-day tri-party repo rate was 5.07%, against 4.90% at Monday's close. The weighted average rate was 5.03%, inching higher from 5.02% Monday. The volume on the same contract was INR 1.58 trillion, against INR 614.59 billion at 0930 IST Monday.

 

Subscription at the RBI's INR-1.5-trillion overnight variable-rate reverse repo is seen at INR 1 trillion, with some traders refraining from aggressively tendering funds ahead of INR-1.8-trillion worth of outflows for GST payments, dealers said. "It's happened before that if the VRRR is fully subscribed then rates will go up later. We don't want that to happen, so I doubt it'll be fully subscribed," a dealer at a private sector bank said. However, some traders expect a full subscription, since the tenure is overnight--one which is favoured by traders. The RBI's INR-1-trillion overnight VRRR conducted Monday saw robust subscriptions of INR 969.14 billion. 

 

The net liquidity absorbed by the RBI--a proxy for liquidity surplus--fell to INR 3.63 trillion Monday from INR 3.96 trillion Saturday, as cash balances went up and on outflows of INR 320 billion for the gilt auction conducted Friday. Dealers expect the weighted average call rate to be around 5.12% by the end of the day. They see the weighted average rate of the tri-party repo market around 5.05%.  End

 

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

 

Edited by Saji George Titus

 

 

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