Call Rates Drop to 4.90% as Demand Eases
By ThePip Desk
Interbank call rates fell to 4.90% on Monday from 5.25% Friday, reflecting eased demand for short-term funds at the start of the reporting cycle.
Interbank call rates, which represent the interest at which banks lend and borrow short-term funds from each other, declined significantly to 4.90% on Monday. This marked a notable decrease from the 5.25% recorded on Friday, indicating an easing of demand in the money market.
The reduction coincided with the beginning of the first week of the fresh reporting cycle, a period often associated with fluctuating liquidity needs. During this time, overnight borrowing rates experienced a range, touching a high of 5.25% and a low of 4.60%.
Understanding Market Liquidity Metrics
Beyond the direct call rates, other critical indicators also reflected the market’s dynamics. The Weighted Average Rate (WAR) in the call money market settled at 5.21% on Monday, a slight reduction from Friday’s 5.23%.
Data from CCIL further illuminated activity across different segments. The WAR in the Triparty Repo (TREP) market stood at 5.02% on Monday, with its total volume reaching Rs 409206.35 crore so far.
Similarly, the Basket REPO market reported a WAR of 5.13% on Monday. Its total volume amounted to Rs 116275.43 crore, contributing to the overall picture of interbank lending and liquidity management.
Key Institutions Shaping Indicative Rates
The indicative call rates, which closed at 5.25% on Friday, were influenced by contributions from numerous financial institutions. These included a mix of public and private sector banks, alongside foreign entities operating within the Indian market.
Major contributors comprised Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, and Bank of India. Other significant participants were Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, and Credit Agricole Bank.
Further contributions came from IndusInd Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, and Standard Chartered. The observed decline in call rates signals a responsive interbank market, effectively adjusting to the liquidity requirements that typically emerge at the start of a new reporting cycle.