Overview

• India’s weighted average call rate rose to 5.73% on July 23 and secured tri-party repo funding reached 5.72%, breaching the 5.5% policy rate and spiking as high as 5.85%.
• The Reserve Bank of India injected ₹500 billion through a two-day repo auction at a 5.53% cut-off rate, drawing bids totaling ₹719 billion.
• Over ₹2 trillion remains parked in seven-day VRRR operations, while monthly GST and tax outflows have cut system surplus to about ₹2.4 lakh crore.
• After an unexpected cash crunch and elevated overnight funding costs, banks signaled they will bid more cautiously in upcoming VRRR auctions.
• Bond traders and money market participants are urging the RBI to specify its preferred surplus liquidity benchmarks as it finalizes a revamped framework by end-July.