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India Call: Ends above standing deposit facility on demand for funds

Informist, Wednesday, May 4, 2022

By Vishal Sangani

 

MUMBAI – The inter-bank call money rate today closed above the Reserve Bank of India’s standing deposit facility rate of 4.15% due to demand for funds from some banks, dealers said.

 

The call rate for one-day loans ended at 4.30%, as against 3.50% on Monday for two-day loans.

 

Money markets were closed on Tuesday on account of Id-ul-Fitr.

 

In a move that caught markets and central bank watchers off guard, the RBI after an off-cycle meeting of the Monetary Policy Committee today unanimously hiked the repo rate by 40 basis points to 4.40%, while voting to remain accommodative while focusing on withdrawal of COVID-19-linked accommodation.

 

“The MPC decided unanimously to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth,” Reserve Bank of India Governor Shaktikanta Das said in a video address today.

 

Das also announced that in line with the tightening in policy rates, the cash reserve ratio was also being hiked by 50 basis points to 4.50% of net demand and time liabilities, effective from the fortnight starting May 21.

 

The measure is expected to result in withdrawal of 870 bln rupees of liquidity from the system, which is in line with the April policy commitment to withdraw excess liquidity provided to the system as part of measures to tackle COVID-19 over a multi-year timeframe.

 

With the rise in the repo rate, the standing deposit facility also adjusts higher by 40 basis points to 4.15%, and the marginal standing facility and bank rate rise to 4.65%.

 

Liquidity in the banking system is currently estimated to be in a surplus of over 5.56 trln rupees as against 5.47 trln rupees on Monday.

 

The liquidity surplus widened because of the government’s month-end spending in the form of salaries and pension payouts.

 

So far, the RBI has drained 5.02 trln rupees through multiple variable rate reverse repo auctions.

  

Following are the highlights of the day:

* The weighted average call rate was 3.67% compared with 3.65% on Monday

* The weighted average rate for triparty repo was 3.76%, as against 3.76% on Monday

* Maturity of standing deposit facility added 1.68 trln rupees to the banking system

 

OUTLOOK

* On Thursday, the one-day call money rate may open near the standing deposit facility rate of 4.15% due to demand for funds from banks

* During the day, the call rate is seen at 4.05-4.30%, dealers said.

 

CALL RATE

4.30%–Today’s close for one-day loans

3.80%–Today’s open for one-day loans

3.50%–Monday’s close for two-day loans

 

BENCHMARK MIBOR (in %)

Mumbai Inter-Bank Offered Rates compiled by Financial Benchmarks India:

TENURE

TODAY

MONDAY

Overnight

3.85

3.86

3-day

14-day

3.91

3.92

1-month

4.13

4.13

3-month

4.25

4.25

India Call: Above standing deposit facility rate; surplus liquidity up

 

MUMBAI – The inter-bank call money rate was above the Reserve Bank of India’s standing deposit facility rate of 3.75% today due to demand from banks to meet their funding requirements in early trade, dealers said.

 

At 0925 IST, the one-day call money rate was at 3.90% as against 3.50% on Monday.

 

Money markets were closed on Tuesday on account of Id-ul-Fitr.

 

Liquidity in the banking system is currently estimated to be in a surplus of over 5.27 trln rupees as against 4.97 trln rupees on Monday.

 

The liquidity surplus widened because of the government’s month-end spending in the form of salaries and pension payouts.

 

The call rate may remain above the standing deposit facility rate throughout the day because of demand for funds from banks.

 

So far, the RBI has drained 5.02 trln rupees through multiple variable rate reverse repo auctions.

 

Following are the other highlights:

* The weighted average call rate was 3.85% against 3.65% on Monday

* The weighted average rate for triparty repo was 3.75%, compared with 3.76% on Monday

* The reversal of standing deposit facility will add 1.39 trln rupees to the banking system

* The call rate is seen within a range of 3.60-3.90% during the day.  (Vishal Sangani)

End

 

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

 

Edited by Tanima Banerjee

 

Cogencis news is now Informist. 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.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to [email protected]a.com

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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