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Informist, Thursday, Aug. 27, 2026

 

By Aaryan Khanna

 

NEW DELHI – The one-day interbank call money rate ended at a two-week high of 5.25%, the Reserve Bank of India's repo rate, as banks sought cash late in the session after their funds were tied up in initial public offering subscriptions, dealers said. Even though systemic liquidity was in substantial surplus, banks held onto excess funds to participate in IPOs and meet robust credit demand at the end of the month. 

 

The one-day call rate ended at 5.25%, flat from the open Thursday and up from 5.20% at the close for two-day loans Tuesday. The weighted average call rate was 5.21%, slightly up from 5.18% Tuesday. The trade volume in the most-traded contract was INR 136.11 billion, down from INR 141.01 billion Tuesday. Money markets were shut Wednesday for Id-e-Milad.

 

The one-day tri-party repo rate closed at 5.25% Thursday, up from 5.01% at open and 5.07% for two-day loans Tuesday. The rate touched a two-week high of 5.55% during the day. The weighted average rate rose to 5.08% from 5.01% on Tuesday. The most-traded contract's volume was INR 4.78 trillion, the same as on Tuesday.

 

"Rates are generally ending higher these days, near the repo," a dealer at a state-owned bank said. "The desks are active on the IPO front. There have been consistent IPOs since last week. For us, flows are coming in from FCNR(B), but most of it is being used for credit now or bringing down high-cost deposits. We don't even get to park much (in money markets)."

 

The net liquidity absorbed by the RBI — a proxy for liquidity surplus — was INR 3.76 trillion Wednesday, down from INR 3.81 trillion Tuesday but near levels last seen in April. Earlier Thursday, the RBI accepted all offers worth INR 1.43 trillion at its overnight, INR-2.00-trillion variable rate reverse repo auction at 0930-1000 IST. Traders remained wary of parking funds for an extended period despite the large liquidity surplus, dealers said. 

 

An article in the Business Standard newspaper on Thursday said some economists and market participants expected the central bank to drain liquidity before a repo rate increase in October or December. The expectation of either an incremental cash reserve ratio for foreign currency non-resident (banks) deposits or an increase in the cash reserve ratio had long been discussed by market participants, but the fear took centre stage Thursday, dealers said.

 

OUTLOOK

On Friday, the three-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, dealers said. Banks' demand for funds may also rise due to weekend funding requirements, cash tied up in IPOs, and the mammoth VRRR auction on Friday.

 

The RBI will conduct a three-day VRRR auction for INR 3.00 trillion from 0930 to 1000 IST on Friday. This is the largest VRRR auction the RBI has notified since July 2022. The auction may be half-subscribed, as banks have cash tied up in equity IPO subscriptions, dealers said. 

 

Dealers expect the three-day call rate at 4.60–5.35% Friday. The tri-party repo rate is expected to be in the 4.50–5.25?nd. The weighted average rate in the call market is seen in the 5.10–5.25?nd, and the tri-party repo rate is likely to be 4.90-5.20%, dealers said.

 

CALL RATE

5.25%--Thursday close for one-day loans

5.25%--Thursday open for one-day loans

5.20%--Tuesday close for two-day loans

 

BENCHMARK MIBOR (in %)  

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	THURSDAY	TUESDAY
Overnight	5.24	5.22
3-day	--	--
14-day	5.83	5.80
1-month	6.06	6.07
3-month	6.56	6.55

 

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India Call: At repo rate; tri-party repo rate swings, eases before close

 

NEW DELHI – The one-day interbank call money rate was at the Reserve Bank of India's repo rate of 5.25%, with the weighted average rate also near the policy repo rate. The tri-party repo rate fluctuated sharply during the day, hitting a two-week high of 5.55% before easing towards the end of trade, dealers said.

 

The volatility was driven by demand from banks looking to subscribe to three initial public offerings. Subscriptions to the initial public offerings of Symbiotec Pharmalab, Hy-Tech Engineers, and Skyways Air Services closed Thursday. 

 

"One of the IPOs was small, but the other two were bigger, over INR 5 billion each," a dealer at a private-sector bank said. "That's why the borrowing requirements from banks peaked after around 1430 IST when the bidding for those IPOs closed. After that, mutual funds came in, so we saw rates have gotten better."

 

At 1715 IST, the one-day call rate was 5.25%, flat from the open and up from 5.20% at the close for two-day loans Tuesday. The weighted average call rate was 5.21%, up from 5.18% Tuesday. The trade volume in the most-traded contract was INR 133.55 billion, down from INR 139.49 billion at 1730 IST Tuesday. Money markets were shut Wednesday for Id-e-Milad.

 

The one-day tri-party repo rate closed at 5.25% Thursday, up from 5.01% at open and 5.07% for two-day loans Tuesday. The weighted average rate rose to 5.08% against 5.01% on Tuesday. Contract volume was INR 4.78 trillion, the same as on Tuesday. 

 

The net liquidity absorbed by the RBI – a proxy for liquidity surplus — was INR 3.81 trillion Tuesday, up from INR 3.64 trillion Monday. Earlier Thursday, the RBI accepted all offers worth INR 1.43 trillion at its overnight, INR-2.00-trillion variable rate reverse repo auction at 0930-1000 IST.  (Aaryan Khanna)

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India Call: At repo rate; traders opt for cautious approach to liquidity

 

MUMBAI – The one-day interbank call money rate traded at the Reserve Bank of India's repo rate of 5.25% Thursday, even as the liquidity surplus Tuesday was at its highest since Aug. 18 at nearly INR 4 trillion. Inflows through foreign currency non-resident (banks) deposits aided liquidity, dealers said. 

 

Some traders expect the tri-party repo rate to rise later in the day since some mutual funds are likely to face month-end redemptions, dealers said. Traders expected about 50% subscription at the RBI's INR-2-trillion overnight variable rate repo auction. Funds parked under the RBI's Standing Deposit Facility fell slightly but still remained near INR 2 trillion. "There's more to it, but basically people are avoiding bulk deposits now so that money is being parked into SDF, they're still putting in VRRR but the SDF matter is more linked to deposits," a dealer at a state-owned bank said.  

 

With a lot of uncertainty on the trajectory of systemic liquidity once the window to raise FCNR(B) deposits shuts Monday, traders are unsure of what subscriptions at VRRRs will be. "Given experience with these VRRRs I'm not sure what sort of subscription we will see," a dealer at a private-sector bank said. Demand for month-end credit disbursements and initial public offerings will put upward pressure on rates, dealers said. 

 

The net liquidity absorbed by the RBI--a proxy for liquidity surplus—was INR 3.81 trillion Tuesday, up from INR 3.64 trillion Monday. At 0933 IST, the one-day call rate was at 5.25%, against 5.20% at Tuesday's close for two-day loans. Money markets were shut Wednesday for Id-e-Milad. The weighted average call rate was 5.22%, up from 5.18% Tuesday. The trade volume on the same contract was INR 9.52 billion at 0933 IST from INR 500 million at 0930 IST Tuesday. At 0933 IST, the one-day tri-party repo rate was 5.01%, against 5.07% at Tuesday's close for two-day loans. The weighted average rate was 5.02% against 5.01% on Tuesday. The volume on the same contract was INR 1.32 trillion at 0933 IST, similar to INR 1.34 trillion at 0930 IST Tuesday.  (Cassandra Carvalho)

End

 

Edited by Saji George Titus

 

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