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Informist, Friday, Sept. 11, 2026

 

By Aaryan Khanna

 

NEW DELHI – The four-day interbank call money rate ended above the Reserve Bank of India's Standing Deposit Facility rate of 5.00% on late demand for funds ahead of the long weekend, dealers said. Money markets are shut Monday for Ganesh Chaturthi. After remaining below the Standing Deposit Facility rate since Sept. 3, the weighted average call rate, the operating target of monetary policy, returned to the RBI's Liquidity Adjustment Facility corridor Friday.

 

The four-day call rate ended at 5.10%, up from 5.00% at the open and 5.05% at the close for one-day loans Thursday. The weighted average call rate was 5.02%, against 4.98% Thursday. The trade volume in the four-day call money contract was INR 127.92 billion, up from INR 103.35 billion in the most-traded contract Thursday.

 

"The tax payments are going out since today is the last working day before 15th itself (Tuesday, the last day for advance tax payments)," a dealer at a state-owned bank said. "So that could be the reason that some banks are facing outflows in their collection accounts, along with the fact that everyone has to maintain four-day cash balances."

 

Liquidity conditions remained comfortable despite the RBI's likely dollar-rupee sell-buy swaps, which began Wednesday and have continued to Friday, due to the small size of those operations so far, dealers said. The impact of the first action on rupee liquidity will only be reflected in data released Tuesday, they said. The RBI's net liquidity absorbed -- a proxy for the banking system liquidity surplus -- was INR 10.43 trillion Thursday, little changed from INR 10.50 trillion Wednesday.

 

As was the case Monday, the RBI's overnight variable rate reverse repo auction was more successful than its long-term operation. Banks parked only INR 604.49 billion at the 26-day, INR 5.00-trillion operation as they widely expected a shorter auction to follow, dealers said. At the four-day INR 5.00-trillion VRRR auction that followed at 1100-1130 IST, the RBI took all offers for INR 3.45 trillion.

 

RBI Governor Sanjay Malhotra Friday said the central bank may conduct open market operations to sell government securities or dollar-rupee sell-buy swaps to drain the surplus liquidity emanating from robust foreign currency non-resident (banks) deposits. The central bank was conscious that these deposits are exempted from cash reserve ratio calculations and will not have higher CRR or other requirements on them, Malhotra said in an interview to financial news channel CNBC-TV18. The comments had no impact on the call and tri-party rates Friday but traders expect overnight money market rates and volumes to rise from next week amid the tax outflows, the end of the reporting fortnight, and the first RBI OMO sale Thursday, dealers said.

 

OUTLOOK

Money markets are shut Saturday and for Ganesh Chaturthi on Monday. The one-day call money rate is seen opening above the RBI's Standing Deposit Facility rate of 5.00% Tuesday due to early demand for funds from primary dealers. Banks are likely to face outflows of up to INR 2 trillion Tuesday for advance tax for the September quarter, dealers said.

 

Overnight VRRR auctions are expected to continue next week despite the tax outflows and the RBI's INR 500-billion open market operations auction Thursday to sell gilts, dealers said. The central bank will conduct an overnight INR 5.00-trillion auction to drain liquidity at 0930-1000 IST Tuesday.

 

Surplus liquidity is seen stable over the weekend and may remain above INR 10 trillion due to banks swapping the last of their foreign currency non-resident (banks) deposits with the RBI at its concessional window that closed Friday. The maturity of the 10.18%, 2026 bond added INR 150 billion in liquidity to the banking system Friday, dealers said. However, the central bank's dollar-rupee sell-buy swap operations are likely to have drained liquidity Friday. Dealers expect the one-day call rate at 4.00–5.25% Tuesday. The one-day tri-party repo rate is expected to be in the 4.00–5.20?nd. 

 

CALL RATE

5.10%--Friday close for four-day loans

5.00%--Friday open for four-day loans

5.05%--Thursday close for one-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	FRIDAY	THURSDAY
Overnight	5.03	5.04
3-day	--	--
14-day	5.68	5.66
1-month	5.84	5.83
3-month	6.33	6.33

 

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India Call: Below SDF; rise in TREPS rate deters tendering at 26-day VRRR

 

MUMBAI – The four-day interbank call money rate traded below the Reserve Bank of India's Standing Deposit Facility rate of 5.00% Friday, as liquidity conditions remained ample. The RBI's second long-term variable rate reverse repo auction with the option of premature reversal held this month saw poor subscription of 12%, even less than that seen at the 30-day VRRR. A steady rise in the weighted average tri-party repo rate this week increased reluctance to park funds in the 26-day VRRR Friday, dealers said. "By the time I realise I'll need funds and ask for the premature reversal, rates would've already risen," a dealer at a state-owned bank said.

 

The weighted average tri-party rate has risen to 4.69% from 4.59% at the beginning of the week, as mutual funds face redemptions and banks are expected to face outflows due to the central bank's likely dollar-rupee sell-buy swaps, dealers said. Some banks are likely to see outflows Friday due to these swaps, with the size of Wednesday's operations speculated at about $2 billion to $3 billion. However, rates are still sharply below the floor of the Liquidity Adjustment Facility, and more than current rates, the expected rise in rates is what led to traders refraining from parking funds at the 26-day operation, they said. 

 

Bets of rate hikes by the RBI's Monetary Policy Committee in October have also increased due to a rise in crude oil prices and US Treasury yields, which has also led to some traders being conservative in deploying funds. As a precursor to rate hikes, traders also expect the RBI to bring out measures to drain durable liquidity, besides conducting VRRRs. At the 26-day VRRR, traders had expected subscription of INR 2.5 trillion, according to the median in an Informist poll.

 

Traders had expected the central bank to follow with an overnight operation for about INR 5 trillion after the 26-day VRRR – which would translate to a four-day operation since Indian financial markets will be shut Monday for Ganesh Chaturthi. Subscription at the RBI's four-day operation is seen at INR 3.63 trillion. However, some traders had said subscription at this operation would be lower due to upcoming tax outflows and funding requirements over the extended weekend. "On Monday, money markets are shut but that's only in Mumbai, branches will be open, so no one will want to be caught short (of funds) Monday," a dealer at another state-owned bank said. Systemic liquidity will see a drain of about INR 2 trillion early next week due to advance tax payments, with goods and services tax payments estimated at a similar size later in the month.

 

The RBI's net liquidity absorbed – a proxy for the banking system liquidity surplus – was INR 10.43 trillion Thursday, little changed from INR 10.50 trillion Wednesday. The 10.18%, 2026 bond redemption is due Friday, for over INR 150 billion. At 1120 IST, the four-day call rate was 4.70%, against 5.05% for one-day loans Thursday. The weighted average call rate was 5.03%, against 4.98% Thursday. The four-day tri-party repo rate was 4.73%, compared to 4.62% for one-day loans Thursday. The weighted average rate was 4.69%, against 4.65% Thursday. The volume on the same contract was INR 4.87 trillion at 1120 IST, against INR 3.49 trillion at 1130 IST Thursday. The trade volume in the four-day call money contract was INR 49.04 billion, higher than INR 38.75 billion at 1130 IST Thursday.  End

 

US$1 = INR 95.55

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

 

Edited by Rajeev Pai

 

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Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

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