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Informist, Monday, Sept. 21, 2026

 

--Weighted avg call rate ends at 5.24% Mon, highest since Jul 31

 

By Cassandra Carvalho

 

MUMBAI – The one-day interbank call money rate ended at the Reserve Bank of India's repo rate Monday, the highest close for this contract since Aug. 27 on demand for funds for initial public offerings and outflows for goods and services tax payments. The weighted average call rate ended at its highest in over seven weeks, with the central bank's liquidity drain adding to a natural rise in funding requirements near the quarter-end.

 

Some banks faced outflows for credit disbursements, they said. Some dealers said system-wide outflows will reduce until the end of the month since the major chunk of scheduled outflows are done, with goods and service tax payments ending Monday. The RBI's intervention in the foreign exchange market is likely to continue draining systemic liquidity, dealers said. The RBI likely conducted dollar-rupee sell-buy swaps to the tune of $8 billion in the secondary foreign exchange market last week, according to dealers overseeing that market. 

 

Even as systemic liquidity is seen falling further until the Centre's expenditure for salaries and pension funds begins, the RBI is likely to continue to hold VRRRs until the central bank's Monetary Policy Committee meeting in October. However, the size of these operations will reduce and has already reduced, dealers said. Banks are unwilling to lend or deploy funds in VRRRs or in overnight borrowing markets due to quarter- and month-end requirements, while also withdrawing from mutual funds, dealers said.  

 

"The RBI will continue to have VRRRs because small and mid-size banks will have outflows, but larger banks will have deposits coming in, etc," a dealer at a private-sector bank said. 

 

Monday, institutional demand for the initial public offering of the National Stock Exchange of India Ltd. picked up, with qualified institutional buyers having subscribed 12.68 times their portion. This is compared to 0.19 times and 1.5 times on day 1 and day 2 of the IPO, respectively. This lock-up of funds in IPOs pushed up demand for funds Monday even as surplus liquidity remained ample, dealers said.  

 

On Monday, the one-day call rate ended at 5.25%, against 4.90% at Saturday's close for two-day loans. The weighted average call rate was 5.24% Monday, sharply up from 4.92% Saturday. Volume in the one-day call money contract was INR 163.91 billion, against INR 8.29 billion for the two-day contract Saturday. The one-day tri-party repo rate ended at 5.04% Monday, from 5.25% for two-day loans Saturday. The weighted average rate was at 5.16% Monday, down from 5.25% Saturday. Volume in the one-day contract was INR 5.30 trillion, compared with INR 106.13 billion in the two-day contract Saturday.

 

OUTLOOK

On Tuesday, the one-day call money rate is seen at or above the RBI's repo rate of 5.25%, and the tri-party repo rate near 5.15% post outflows for goods and services tax and rising demand for credit disbursement nearing the end of the September quarter. Outflows for settlement of the central bank's intervention in the foreign exchange market are likely to continue to drain liquidity, dealers said.

 

The RBI is seen continuing to reduce the size of daily VRRR auctions. The RBI will conduct an overnight VRRR of INR 750 billion Tuesday, against the INR-1-trillion auction Monday and the INR-2.25-trillion operation it held Friday. Some market participants expect the RBI to conduct more open-market operations auctions to sell gilts after announcing INR 1 trillion worth of such sales for September. Dealers expect the one-day call rate to be at 4.50–5.40% Tuesday, while the one-day tri-party repo rate is seen at 4.50-5.30%.

 

CALL RATE

5.25%--Monday close for one-day loans

5.30%--Monday open for one-day loans

4.90%--Saturday close for two-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Interbank Outright Rates compiled by Financial Benchmarks India:

 

TENURE	MONDAY	FRIDAY
Overnight	5.28	5.10
3-day	--	--
14-day	5.81	5.82
1-month	5.93	5.92
3-month	6.34	6.32

 

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India Call: Above RBI's repo rate on demand for funds amid IPOs, tax flows

 

MUMBAI – The one-day interbank call money rate was above the Reserve Bank of India's repo rate of 5.25% as demand rose after the tri-party repo market shut at 1600 IST, dealers said. The tri-party repo rate ended near the central bank's Standing Deposit Facility rate of 5.00% while the weighted average rate was near the policy rate of 5.25% due to demand for funds amid the National Stock Exchange's initial public offer and outflows of around INR 1.8 trillion for goods and services tax payment, dealers said. 

 

The weighted average rate in the tri-party repo market was 5.16%, the highest so far in September, barring that on Saturday when the volume was just INR 106.13 billion. The weighted average rate in the tri-party repo market was 5.25% Saturday. On Monday, volume in the one-day loans segment was INR 5.30 trillion, sharply up from Saturday but lower than INR 5.12 trillion Friday. The tri-party repo rate for one-day loans ended at 5.04%, down from 5.25% for two-day loans Saturday. 

 

At 1737 IST, the one-day call rate was 5.30%, up from 4.90% Saturday for two-day loans. The weighted average call rate was 5.24%, against 4.92% Saturday. The trade volume in the same call money contract was INR 162.41 billion, against INR 8.27 billion at 1730 IST Saturday. 

 

The tri-party repo rate was mostly near the repo rate during the day as most banks were on the borrowing side amid GST outflows, dealers said. Rates also rose due to demand for funds amid the National Stock Exchange's initial public offer. At the time of writing this copy, NSE's IPO was subscribed 12.68 times by qualified institutional buyers.

 

"We will see at least INR 2 trillion outflows due to OMO (open market operations auction sale of gilts) sale and GST (goods and services tax)," a dealer at a private sector bank said. The RBI sold INR 250 billion of gilts at the open market operations auction Monday, and the payment by banks to the central bank will be made on Tuesday. These outflows, along with around INR 1.80 trillion outflows for GST payments, are likely to pull down the liquidity surplus by at least INR 2 trillion. 

 

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was INR 6.05 trillion Sunday, against INR 6.02 trillion Saturday but down from INR 6.20 trillion Friday. Dealers said the central bank's intervention to support the rupee will also weigh on the banking system's liquidity. 

 

"Today (Monday) was a good day, there was not much intervention in the rupee, but early last week there was intervention, and we saw liquidity falling... we can see this again if the rupee crosses 96. The RBI is not letting the rupee break 96 level," the dealer said. 

 

Despite these outflows and rising demand for funds amid credit disbursements during the quarter-end, dealers expect the central bank to continue to conduct overnight variable rate reverse repo auctions. They expect the VRRR auction size to remain at INR 1 trillion to INR 1.50 trillion. At Monday's overnight VRRR auction for INR 1.00 trillion, the RBI took all INR-750.58-billion offers.  (J. Navya Sruthi)      

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India Call: Above repo rate on GST outflows, funding demand for IPOs

 

MUMBAI – The one-day interbank bank call money rate Monday was above the Reserve Bank of India's policy rate of 5.25% due to demand for funds amid scheduled outflows for goods and services tax payments and funding demand for initial public offerings, dealers said. The tri-party repo rate for one-day loans was near the central bank's repo rate due to demand for funds and as liquidity surplus continued to fall.

 

"Last working day, rates were up, so today rates are up... we have GST outflows and NSE IPO, so rates are seen higher today (Monday)," a dealer at a state-owned bank said. Dealers expect outflows of around INR 1.8 trillion for GST payments Monday. 

 

Moreover, demand for funds from institutional buyers is seen higher due to funding requirements to participate in the National Stock Exchange's initial public offer Monday. NSE's IPO was fully subscribed as of the second day, with strong demand from both non-institutional investors and qualified institutional buyers. Qualified institutional buyers subscribed 1.5 times their portion, with bids placed for 38.57 million shares against the 25.21 million shares offered. 

 

At 1001 IST, the one-day call rate was 5.30%, up from 4.90% Saturday for two-day loans. The weighted average call rate was 5.30%, against 4.92% Saturday. The one-day call money rate opened at 5.30%, the highest opening for one-day loans since Aug. 14. The trade volume in the same call money contract was INR 38.57 billion, against INR 70 million at 1045 IST Saturday.

 

At the same time, the one-day tri-party repo rate was 5.17%, compared to 5.25% Saturday for two-day loans. The weighted average rate was 5.15%, against 5.25% Saturday. The tri-party repo rate opened at 5.15%, which is the highest opening since Aug. 6. The volume on the same contract was INR 2.46 trillion at the same time, against INR 156 million at 1000 IST Saturday. Volumes are usually significantly low in the interbank call money and tri-party repo markets Saturday.

 

Dealers expect the tri-party repo rate for one-day loans to rise to 5.30-5.40% during the day as the liquidity surplus fell Friday. The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was INR 6.2 trillion Friday, down from INR 6.94 trillion Thursday due to outflows of INR 500 billion for the open market operations auction which was conducted Thursday.  

 

Dealers expect the RBI's overnight, INR-1-trillion variable rate repo auction to see under subscription due to higher borrowing rates in the overnight market. "We see less subscription in VRRR due to higher overnight rates and outflows during the day," a dealer at a private sector bank said.

 

According to the median in an Informist Poll of nine market participants, total offers are between INR 250 billion and INR 1 trillion at the auction, with a median estimate of INR 550 billion. All cut-off estimates were at the highest level of 5.24%.  (J. Navya Sruthi)

 

End

 

US$1 = INR 95.8150

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

 

With inputs from J. Navya Sruthi

Edited by Deepshikha Bhardwaj

 

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