Call money rates on Monday touched the 7% mark as banks stepped up borrowing to meet heightened liquidity requirements ahead of the fiscal year-end.
Market participants said the demand for short-term funds has risen sharply due to balance sheet adjustments, and regulatory requirements, leading to tighter liquidity conditions in the banking system.
The call money rate is the interest rate charged on these overnight funds.
2 March 2026
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According to the Clearing Corporation of India (CCIL), rates in the call money market which is used by lenders and other institutions for short term liquidity requirements, opened at 6.85%, and then touched at 7%.
The call money market is a segment of the money market where very short-term funds are borrowed and lent, typically for one day (overnight).
Similarly, the Tri-party repo rate opened at 5.60%, and then touched a high of 6.99%.
"Overnight rates have gone up due to year end pressure where banks are reluctant to lend in the call market and also due to tomorrow's market holiday. Though system liquidity is comfortable and likely to ease in coming days, market participants panicked in the early morning trades and covered their short positions," said Balasubramanian R, Head of Treasury at Dhanlaxmi Bank.
Usually, during the financial year end, demand for funds rises from banks despite the liquidity in the banking system remain in surplus mode. This is because of higher withdrawals and payments by businesses closing their books, and the need to meet regulatory requirements set by the Reserve Bank of India (RBI).
Currently, liquidity in the banking system is estimated to be in surplus of around ₹1.14 lakh crore as on March 27.
In order to support liquidity, the central bank today injected ₹50,001 crore transient liquidity to the banking system through three-day variable rate repo (VRR) auction.
