Interbank call money rate surges over RBI’s corridor

Despite a liquidity surplus, the interbank call money rate in India has climbed above the upper band of the central bank's interest rate corridor, exposing banks to higher costs of liquidity. The surge comes despite the Reserve Bank of India aiming to keep the underlying weighted average call rate closely aligned to its policy repo rate. While some banks have abundant liquidity, others are struggling, indicating a tight liquidity situation for them. At present, the repo rate is at 6.50% while the marginal standing facility, the higher band of the RBI's liquidity adjustment facility, is at 6.75%.

Interbank call money rate surges over RBI’s corridor
Despite a liquidity surplus, the interbank call money rate in India has climbed above the upper band of the central bank's interest rate corridor, exposing banks to higher costs of liquidity. The surge comes despite the Reserve Bank of India aiming to keep the underlying weighted average call rate closely aligned to its policy repo rate. While some banks have abundant liquidity, others are struggling, indicating a tight liquidity situation for them. At present, the repo rate is at 6.50% while the marginal standing facility, the higher band of the RBI's liquidity adjustment facility, is at 6.75%.