Goodbye MIBOR, Hello SORR: Understanding RBI’s New Interest Rate Benchmark 04Oct2025

Goodbye MIBOR, Hello SORR: Understanding RBI’s New Interest Rate Benchmark 04Oct2025

Follow @vrk100

 

 

(The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

Abbreviations used:

FBIL Financial Benchmarks India Pvt Ltd

LIBOR London Interbank Offered Rate 

MIBOR Mumbai Interbank Offered Rate

RBI Reserve Bank of India 

SORR Secured Overnight Rupee Rate

SOFR Secured Overnight Financing Rate (the US)

TREPS Triparty or Tri-party Repos 

 

The Reserve Bank of India has introduced a new interest rate benchmark called SORR, which stands for Secured Overnight Rupee Rate. While it may seem like a technical change, this shift could have a big impact on the way India’s financial system works. 

 

1. What is SORR?

SORR is based on actual overnight borrowing transactions that happen in India’s secured money markets. In these markets, institutions borrow money overnight using government bonds or other approved securities as collateral. 

The rate at which they borrow is what SORR will track. This will make it a reliable indicator of the real cost of short-term funds in India's financial system.

 

2. Why Was SORR Introduced?

As of now, India has been using a benchmark called MIBOR, or Mumbai Interbank Offered Rate. MIBOR is based on trades in call money market which comprises just banks and primarily dealers.

However, this market represents only a small portion of overnight borrowing in India. Because MIBOR is based on low-volume call money market, it has been considered less representative of true market activity.

Any benchmark interest rate should be reflective of current market dynamics. A committee set up by RBI recommended an alternative benchmark, called SORR. The committee's recommendations were made public in Oct2024. 

The RBI committee on MIBOR Benchmark suggested FBIL or Financial Benchmarks India Pvt Ltd might develop a benchmark based on the secured money market (both market repo and TREP), that is, a Secured Overnight Rupee Rate (SORR). 

 

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The Building Blocks of India's Money Market: Key Segments You Should Know 30Sep2025

RBI's LAF Corridor Simplified: SDF, MSF & All That Jazz 23Sep2025 

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3. Why the need for SORR? 

Post-LIBOR, there have been several changes in global funding markets. The US has introduced SOFR or Secured Overnight Financing Rate to replace the discredited LIBOR benchmark. 

SOFR indicates the cost of overnight borrowing in the US and is collateralised by the US treasury securities. 

Likewise, Switzerland introduced SARON or Swiss Average Rate Overnight to replace Swiss franc LIBOR.

SARON is a transaction-based overnight interest rate benchmark based on actual repo transactions secured by Swiss government bonds.

Bank of England administers SONIA (Sterling Overnight Index Average) as the UK’s official benchmark interest rate for sterling (GBP) markets. The UK wound down the LIBOR completely from Oct2024. 

These moves by the US, the UK and Switzerland are part of a global shift where many countries are replacing LIBOR with new, transaction-based benchmarks to improve market integrity and stability.

India is following international best practices by moving away from the MIBOR benchmark, which is based on unsecured call money markets, toward SORR — a new benchmark grounded in secured overnight lending transactions. 

This shift aims to enhance transparency, accuracy and credibility by reflecting real market activity, just as other countries have done by replacing LIBOR with secured, transaction-based rates like SOFR in the US and SARON in Switzerland. 

 

4. How Is SORR Different from MIBOR?

Unlike MIBOR, the Secured Overnight Rupee Rate (SORR) is based on actual transactions in the secured overnight market—specifically, the market repo and tri-party repo (TREPS) segments. 

These two together account for approximately 98 per cent of overnight money market volumes in India, making SORR a far more representative and reliable indicator of the true cost of overnight borrowing.

Why SORR Is More Trustworthy and Inclusive?

MIBOR is derived from the call money market, which now contributes just 2 per cent to overnight market volumes (FY 2024-25). 

In contrast, SORR reflects activity in the far more active and diverse secured markets, involving a broad spectrum of participants including banks, mutual funds, insurance companies, corporates and other financial institutions.

Over time, there has been a clear market shift from unsecured to secured lending, as participants increasingly prefer the safety and liquidity of repos. This shift underlines the relevance of SORR as a benchmark rooted in current market dynamics.

How SORR Is Calculated?

SORR is based on actual trades conducted during the first three hours of the trading day in:

Basket Repo: A type of repurchase agreement where borrowing is backed by a predefined "basket" of eligible government securities rather than a single specific security, allowing flexibility and ensuring high-quality collateral.

TREPS (Tri-party Repos): A secured market segment dominated by mutual funds on the lending side. Mutual funds compete directly with banks for household and corporate surpluses.

This methodology contrasts with MIBOR, which is calculated as the volume-weighted average rate of trades in the first hour of the call money market, an unsecured segment.

Regulatory Backing and Future Outlook

SORR has been developed by Financial Benchmarks India Pvt Ltd (FBIL) under the guidance of the RBI. Given its secured market base and broader participation, SORR is expected to be a more accurate barometer of overnight interest rates going forward.

Importantly, SORR is also likely to play an increasing role in interest rate derivatives markets such as:

> Overnight Index Swaps (OIS)

> Forward Rate Agreements (FRAs)

> MIBOR-based Total Return Swaps (TRS) 

FBIL currently publishes data on both overnight MIBOR as well as SORR. 

Table showing comparison of MIBOR and SORR > 

Click on the image to view better > 

 

To better understand the shift from MIBOR to SORR, the table aabove compares key features of both benchmarks. It clearly shows how SORR, with its secured and more liquid market base, offers better transparency, lower volatility and broader market participation.

As shown above, SORR is derived from a significantly larger share of the overnight market (98% vs. 2%) and involves a wider range of participants. This makes it more reflective of actual borrowing costs across the financial system. 

Moreover, because it's based on collateralised transactions, SORR offers lower volatility and better alignment with monetary policy transmission.

 

5. Does It Affect You?

For most ordinary people, SORR will not make a noticeable difference right away. Home loan EMIs, personal loans and fixed deposit rates are not directly linked to this new benchmark. 

However, in the background, financial institutions, bond markets and derivative markets rely on these reference rates to price products and manage risks. A more accurate and stable benchmark can indirectly lead to fairer pricing and greater market stability over time.

Question: Will my home loan EMI change?
Answer: Not directly. Most consumer loans are not yet linked to SORR.

Q: Who sets SORR?
A: It is calculated by FBIL based on actual market repo and TREPS trades.

 

6. When Will SORR Replace MIBOR?

As of now, the RBI has not announced a specific date when SORR will replace the existing overnight MIBOR. The transition from MIBOR to SORR will be gradual, allowing markets and institutions time to adjust. 

Financial Benchmarks India Ltd (FBIL) is responsible for developing and implementing SORR. During this period, both MIBOR and SORR will coexist.

 

7. Current status of SORR

FBIL started publishing the new risk-free SORR benchmark rate, on its website, effective from 07Jul2025. However, it stopped publishing the data publicly from 01Oct2025 -- meaning the data are now available only to paid subscribers. 

As suggested by the RBI Committee on MIBOR Benchmark, participants have been using, as per their preference, both interest benchmarks, namely, SORR and overnight MIBOR for their market transactions. 

 

8. Why Does It Matter in the Bigger Picture?

This move is part of a larger global trend. Countries around the world have been moving away from older, less reliable benchmarks such as LIBOR and replacing them with new rates like SOFR in the United States. 

These new benchmarks are typically based on secured, transaction-based data, making them more transparent and robust. India is now following a similar path with SORR.

9. Summary

While SORR may not impact your daily life immediately, it marks a quiet yet meaningful shift in how India’s financial system operates. By relying on real, secured market transactions, SORR introduces a more credible and transparent benchmark for overnight interest rates.

This transition lays a stronger foundation for future financial products, investment decisions and economic policymaking—improving trust in the system over time.

Notably, with Indian government bonds recently included in global benchmark indices such as those by Bloomberg and JP  Morgan, the adoption of a robust and transparent rate like SORR becomes even more relevant. It provides foreign investors with a more accurate and dependable measure of short-term funding costs.

Though the change won't happen overnight, it reflects a broader move toward a more resilient, inclusive and market-focused financial framework.

SORR represents a major evolution in India's benchmark rates. As the market increasingly favors secured lending, SORR is well-positioned to become the primary reference rate for overnight funding and short-term liquidity management in India.

If you're curious to learn more, you can look up the RBI’s monetary policy statement from December 2024 or visit the FBIL website, where updates on SORR’s development are being published.

 

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References: 

RBI Report of the Committee on MIBOR Benchmark 01Oct2024

RBI governor's statement on SORR introduction 06Dec2024 

RBI Monetary Policy Report Apr2025: Table IV:3 (page 66) Average Volume and share in overnight money market - call money market 2%; Market Repo 28% and Triparty Repo 70% share 

RBI press release on Revised Liquidity Management Framework 30Sep2025 - Overnight WACR will continue to be the operating target of RBI's monetary policy; LAF corridor of SDF and MSF, LAF policy repo rate, 7-day VRR/VRRR, CRR, etc.

RBI Determinants of Uncollateralised Money Market Volumes 23Jul2025 - call money, TREP, primary dealers, mutual funds, government flows, USD-INR forward premia, etc. 

FBIL Methodology document for SORR 

FBIL pricing of SORR data 

FBIL SORR data from 01Sep2025 to 30Sep2025: 

 

 

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Disclosure:  I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.

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Jane Goodall: What Separates Us from Chimpanzees?

What Separates Us from Chimpanzees?

Jane Goodall 

TED 2003

 

Good morning, everyone.

First, let me say what a privilege it’s been to be part of this incredible gathering over the past few days. The talks, the ideas, the people — it's all been extraordinary. And in many ways, I’ve felt very at home here, because so much of what we’ve heard connects with my life’s work.

I’ve come directly from the deep tropical rainforest of Ecuador, a place so remote you need a small plane just to get there. I was with Indigenous people — faces painted, parrot feathers in their headdresses — people fighting to protect their home from oil companies, from roads, from the relentless march of so-called progress.

What struck me, and why I bring it up here, is that in the heart of that untouched rainforest, they had solar panels — the first in that part of Ecuador. With them, they powered a water pump so women no longer had to carry water from the river. They could store electricity in batteries, giving light for half an hour a day in each of the eight homes in the village.

And there was the Chief — resplendent in full regalia — sitting with a laptop.

(Laughter)

This is a man who only learned about the "white man" 50 years ago, and now he's saying, "We want to learn. We want healthcare, to speak other languages. We’re good at languages." They’re embracing selective parts of the modern world — like computers and solar power — while still fighting to protect their forest from exploitation driven by foreign debt, the World Bank, and corporations.

From that rainforest, I’ve come here — and now, I want to bring another voice to this TED stage. Not a human one, but the voice of the animal kingdom.

So let me offer a greeting, from a chimpanzee in the forests of Tanzania:

Ooh ooh ooh ooh ooh!

(Applause)

I’ve studied chimpanzees in Tanzania since 1960. In that time, technology has transformed how we work in the field. For example, by analyzing fecal samples, we can now do DNA profiling and finally know which males father which infants. It turns out chimpanzees have a very promiscuous mating system — so this opens up new research avenues.

We use GIS to map their ranges. We track deforestation using satellite imagery. We can record their behavior at night with infrared cameras. It’s remarkable what’s now possible compared to when I first sat in the forest with a notebook and binoculars.

In captivity, technology is also helping us learn about animal cognition. One chimp in Japan — named Ai, meaning “love” — works with a touchpad and screen. She’s 28 and faster than many humans at complex tasks. She loves using the computer and performs tasks even without food rewards — just for the satisfaction of doing better.

When I first arrived in Gombe, the chimps mostly ran away. But I’ll never forget the first time I watched one — David Greybeard — calmly using a blade of grass to fish termites from a mound. Sometimes, he’d strip leaves off a twig — modifying it.

That was tool-making.

At the time, science taught that only humans used and made tools. We were "man the toolmaker." But when I told my mentor, Louis Leakey, he said:

"Now we must redefine 'tool,' redefine 'man,' or accept chimpanzees as humans."

(Laughter)

Since then, we’ve observed nine types of tool use at Gombe alone. Across Africa, different chimp groups use different tools in different ways — and this knowledge is passed on through observation and imitation. That’s the very definition of culture.

What we’ve learned over the decades is that the line between humans and animals is not sharp. It’s a blurry, shifting boundary.

Chimpanzees have long childhoods — five years suckling, followed by years of emotional dependence. Their social lives are deep and complex. They form affectionate, lifelong bonds. They show compassion, altruism, and emotions that seem remarkably similar to our own: joy, fear, sadness, even despair.

Their communication is rich: they kiss, embrace, hold hands, pat backs, shake fists — in contexts similar to ours. They hunt cooperatively and share. Some recognize themselves in mirrors — a sign of self-awareness. They have a sense of humor.

So, we now know we’re not the only beings with personalities, minds, and above all, feelings.

And yet — despite how much they’ve taught us — chimpanzees are disappearing fast. A century ago, there were about two million. Today, perhaps 150,000 remain.

Why? The same reasons you’ve already heard today: deforestation, population growth, poverty, and greed.

The bushmeat trade is particularly devastating. Logging companies build roads into remote forests, and hunters follow. They kill everything larger than a rat, smoke it, and sell it in towns. It’s not subsistence — it’s commerce. Entire species are being wiped out, and so are the Indigenous cultures that depended on them.

The pattern is familiar: forests fall, species vanish, cultures erode.

When I look at Africa — my beloved Africa — I see spreading deserts, hunger, disease, overpopulation, and poverty.

Do you think the people of Easter Island didn’t know they were cutting down their last tree? Of course they did. But desperation drives shortsighted decisions. If you're starving, you cut the last tree hoping to make it just one more day.

So yes, the picture can seem bleak.

But one thing does separate us from the chimpanzees: language.

We can talk about the past, plan for the future, share ideas. And yet, with all that ability, we are destroying the planet. In some ways, those of us in the developed world are worse — because we know what we’re doing.

We bring babies into a world where water poisons them, air sickens them, and food is grown in toxic soil. And not just in poor countries — in many of ours. We all carry chemicals in our bodies that didn’t exist 50 years ago.

What are we doing?

Children in cities grow up in concrete jungles, never knowing real nature. No trees, no birdsong, no forest canopy — only screens and simulation.

Eventually, I had to leave the forest I loved, because the chimpanzees were vanishing. I knew I had to raise awareness. And the more I spoke, the more I realized how everything is connected: the destruction of nature, the suffering of people, the greed of wealthy nations, the despair of the poor.

And that despair — I see it everywhere, especially among young people. They say, “What’s the point? Nothing we do matters.” Some turn to apathy. Others to anger.

And when young people say to me, “You’ve compromised our future,” I feel deep shame.

That’s why, in 1991 in Tanzania, I started a program called Roots & Shoots.

Its message is hope.

Just like little shoots can break through brick walls, young people — even the smallest — can change the world.

Roots & Shoots now exists in over 60 countries, with thousands of groups. It empowers youth of all ages to take action in three areas:

• Care for people

• Care for animals

• Care for the environment

Kids choose their own projects: restoring rivers, building gardens, helping elders, saving shelter animals. And it works because they own it. They’re doing what they care about.

Technology plays a role, too — helping these youth connect, share success, or ask for help from peers in other countries. One group fails, another offers advice. It’s grassroots, it’s global, and it’s growing.

The philosophy is simple:

• No violence.

• Solve problems with knowledge, persistence, and compassion.

• Treat all life with respect.

Young people ask me, “Dr. Jane, do you really have hope for the future?”

Yes — because of the human brain. We created these problems. We can solve them.

Yes — because of nature’s resilience. Ruined rivers can be restored. Dead lands can bloom again.

Yes — because of the indomitable human spirit.
Look at Nelson Mandela — 27 years in prison, yet he emerged to forgive, to heal, to lead.

Even in the aftermath of 9/11, amidst fear and horror, there was compassion, courage, and love.

One woman gave me a little bell, made from a defused landmine from Cambodia — a killing field transformed into peace. She said, “Ring this when you speak of hope.”

So I do.

Because hope is not out there with politicians or institutions.

Hope is in our hands.
In your hands. In mine.
And in the hands of our children.

If we each live consciously — if we reduce our ecological footprints, and choose ethically — we can change the world. Maybe even overnight.

Thank you.

 

 - - -

 

The above is transcript of a speech (Ted Talks) made by Jane Goodall in Mar2003.

Jane Goodall dies on 01Oct2025.  

The Building Blocks of India’s Money Market: Key Segments You Should Know 30Sep2025

The Building Blocks of India’s Money Market: Key Segments You Should Know 30Sep2025

Follow @vrk100

 

 

(The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

Abbreviations used:

 

CD certificate of deposit

CP commercial paper

G-Sec government security

FEMA Foreign Exchange Management Act (FEMA), 1999 

NCD non convertible debenture 

RBI Reserve Bank of India

SEBI Securities and Exchange Board of India 

TREP triparty repo or tri-party repo

 

 

 

Just as cells are the fundamental building blocks of life, creating the structure and function of all forms of life, the various segments of the money market are essential part of India's broader financial system. 

While the money market itself may not always be in the spotlight like stocks or bonds, it plays a crucial role in short-term finance, helping banks, companies and the government manage liquidity effectively.

In India, the money market is made up of several segments, each designed to meet specific short-term liquidity needs. These building blocks help in the efficient functioning of the economy.

In this blog, we’ll explore these key segments – from call money to term money – and see how each one contributes to the stability and growth of India's financial landscape. 

 

Whether you're new to the world of finance or just curious, this guide will help you better understand the pivotal role played by the money market.

 

 

Primary segments of Money Market:

 

The money market is a sector of the financial market that deals with short-term borrowing and lending, typically in instruments with maturities of one year or less.

 

India's money market comprises:

 

1. Uncollateralised market (call money market) 

 

2. Collateralised market (Triparty repo or TREP)

 

3. Commercial paper (CP)

 

4. Certificate of deposit (CD)

 

5. Treasury Bills or T-Bills 

 

 

The categories are explained below:

 

1. The uncollateralised segment (Call, Notice and Term money market): 

Call / Notice / Term Money Market: This is primarily an inter-bank market for short-term unsecured lending and borrowing to meet liquidity requirements.

(a). Call Money: Loans for one working day (overnight).

 

Call money means borrowing or lending in unsecured funds on overnight basis. Overnight transactions in India are referred to as call money.

 

The over-the-counter transactions in Call, Notice and Term Money Markets are reported by participants in an electronic trading platform called NDS - CALL or Negotiated Dealing System - CALL, which is managed by the Clearing Corporation of India Ltd (CCIL).

 

Participants do call money transactions directly on NDS-CALL platform also, in addition to over-the-counter (OTC). 

 

NDS-CALL is a quote-driven system which was launched on 18Sep2006.

 

 

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See related:

 

RBI's LAF Corridor Simplified: SDF, MSF & All That Jazz  

 

Money Market Mutual Funds - An Introduction

 

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(b). Notice Money: Loans for periods from 2 days to 14 days.

 

Notice Money means borrowing or lending in unsecured funds for tenors up to and inclusive of 14 days excluding overnight borrowing or lending

(c). Term Money: Loans for periods exceeding 14 days and up to one year.

Term Money means borrowing or lending in unsecured funds for periods exceeding 14 days and up to one year.

 

Participants eligible to participate in Call, Notice and Term Money Markets, both as borrowers and lenders, are:

 

> scheduled commercial banks or SCBs (excluding local area banks)

> payment banks 

> small finance banks or SFBs

> regional rural banks or RRBs

> state cooperative banks, district central cooperative banks and urban cooperative banks

> primary dealers 

 

These banks and primary dealers will have to follow prudential limits set by Reserve Bank of India (RBI) while participating in the Call, Notice and Term money market.

 

For example: 

 

SCBs: Prudential limits are as approved by respective bank boards internally, but subject to inter-bank liabilities prescribed by RBI.

 

Payment banks and RRBs:  In Call, Notice and Term money market: 100% of capital funds on a daily average basis in a reporting fortnight; and 125% of capital funds on any given day.

 

SFBs: In Call and Notice money market: 100% of capital funds on a daily average basis in a reporting fortnight; and 125% of capital funds on any given day. And in Term money market: As per internal board approved limits. 

The term 'capital funds' refers to the total of a bank's Tier 1 Capital (core capital) and Tier 2 Capital (supplementary capital).

 

Why lend in the call money market without any colalteral security: Banks lend to each other in the call money market on an unsecured basis because the loans are very short-term (usually overnight) and the risk of non-repayment is minimal. The process relies on mutual trust, liquidity, and regulatory safeguards, making collateral unnecessary.

However, banks don’t lend to just anyone. They lend based on trust, relationships, financial stability and creditworthiness. Only reputable, stable banks have access to these loans, with regulatory oversight from the RBI ensuring safe liquidity management. 

 

 

Other RBI norms:

 

Eligible participants are free to decide on interest rates in the Call, Notice and Term Money Markets.

Call, Notice and Term Money transactions shall be executed in Over-the-Counter markets, including on the NDS-CALL platform or any other Electronic Trading Platform authorised by the RBI.

The market timings for Call, Notice and Term Money transactions are from 9:00 AM to 7:00 PM on business days (effective 01Jul2025).

All Call, Notice or Term Money transactions, other than those executed on NDS-CALL platform, shall be reported to the NDS-CALL platform within 15 minutes of execution.
 

 

2. The collateralised segment (triparty repo, market repo and repo in corporate bonds): 

 

The transactions in the collateralised segment are dominated by Triparty Repos or TREPS.  

 

As stated above, call money transactions are done without any collateral based on mutual trust and creditworthiness among banks and primary dealers.

 

But in the collateralised part of the money market, borrowing entities need to offer security to lenders -- as such, this is called collateralised market. This is secured lending. 

 

While call money market is exclusive to banks and primary dealers, the participants in the uncollaterlised segment of the money market are: 

 

banks, 

primary dealers, 

mutual funds, 

insurance companies and 

corporates.

 

Triparty repo means a repo contract where a third entity (apart from the borrower and lender), called a Triparty Agent, acts as an intermediary between the two parties to the repo to facilitate services like collateral selection, payment and settlement, custody and management during the life of the transaction. 

 

A Triparty Repo (TREP) is a type of short-term loan transaction used in the financial markets, mainly for borrowing and lending money. 

 

The term "repo" stands for repurchase agreement, which is a kind of loan where one party sells a security (like government bonds) to another party with an agreement to buy it back later, usually the next day or within a few days.

In a normal (bilateral) repo, the borrower and lender manage everything themselves. In a Triparty Repo (TREPS), a third, neutral entity steps in to act as a safeguard and manager. In India, the third pary is Clearing Corporation of India Ltd or CCIL.

The CCIL holds the collateral (Government Securities) in a safe account. It checks the quality and value of the collateral to ensure it's sufficient to cover the loan amount, removing the need for the lender to worry about this.

The actual borrower and lender do not have to know each other. The CCIL acts as a counterparty to both sides, which makes the trading process faster, anonymous and more efficient.

The CCIL guarantees the trade. If the borrower defaults (fails to pay back the loan), the CCIL steps in to make sure the lender still gets their money, typically by taking and selling the collateral. This dramatically reduces the credit risk for the lender.

In a bilateral repo, banks have to constantly monitor the value of the government securities or G-Secs collateral to ensure it remains sufficient to cover the loan (a process called Mark-to-Market and margin calls). The CCIL handles all of this automatically, applying haircuts and managing collateral substitutions, freeing up the banks' resources.

The CCIL handles all the back-office procedures: the transfer of G-Secs and the movement of funds, ensuring the transaction is settled securely and automatically.

TREPS market allows borrowing banks to simply pledge a pool of eligible G-Secs with the CCIL. The CCIL then selects the most appropriate collateral for the transaction. This is a form of General Collateral (GC) funding, which is much more flexible than trading specific securities.

If a borrowing bank needs to swap out one G-Sec for another during the repo term, the CCIL handles the substitution without borrowing bank having to get involved.

For Mutual Funds, TREPS is the perfect tool to invest large sums of surplus cash for just one day. It's safe, gives a small return, and the cash is guaranteed to be back the next day to meet investor redemption (withdrawal) requests.

The lending side of TREPS market is dominated by mutual funds, which have nearly 60 per cent market share.

Triparty Repo (TREP) is like a short-term loan where you use valuable assets (like government bonds) as a guarantee. It's safe for both parties, thanks to the involvement of a trusted third party (the triparty agent). 

 

Collateralised Borrowing and Lending Obligation (CBLO) segment of the money market was discontinued and replaced with Triparty Repo from 05Nov2018. In Indian bond market parlance, Triparty Repos are known as TREPS. 

3. Commercial Paper (CP) and non-convertible debenture or NCD (original maturity upto one year) – instruments with original maturity up to one year which can be issued by companies, including non-banking finance companies (NBFCs) and financial institutions.

 

Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. CPs are issued by commercial or corporate entities and their tenure shall be between seven days to one year.

Non-Convertible Debenture (NCD) means a secured money market instrument with an original or initial maturity upto one year. 

The following entities are eligible to issue CPs and NCDs:

 

> companies

> non-banking financial companies or NBFCs, including HFCs or housing finance companies

> InvITs or infrastructure investments trusts

> REITs or real estate investment trusts

> AIFIs or all-India financial institutions, like, Exim Bank, NABARD, ECGC and NHB

> any other body corporate with a minimum networth of Rs 100 crore

> any other entity as permitted by RBI 

> co-operative societies and limited liability partnerships with a minimum networth of Rs 100 crore, subject to certain conditions 

 

Eligible investors in CPs and NCDs are:

 

> All residents are eligible to invest in CPs and NCDs

> Non-residents are eligible to invest in CPs and NCDs to the extent permitted as per FEMA

 

Other RBI norms:

 

CPs and NCDs shall be issued in dematerialised form and held with a depository registered with SEBI.

CPs and NCDs shall be issued in minimum denomination of Rs 5 lakh and in multiples of Rs 5 lakh thereafter.
 

CPs shall not be issued for a period of less than seven days or more than one year. And NCDs shall not be issued for a period of less than ninety days or more than one year.

Issuing CP/NCDs with call / put options is not allowed.  

 

The minimum credit rating for the issuance of CPs and NCDs shall be ‘A3’ as per rating symbol and definition prescribed by SEBI.

Let us see how a CP works in practice:

A large corporation, say, Larsen & Toubro Ltd, needs money for short term operational expenses. A CP allows L&T to raise the necessary funds without going through traditional bank loans. 

 

So, L&T can raise money from the market by issuing a CP for say, 50 days. As its credit standing is high in the market, it's possible for L&T to raise money easily without offering any collateral obligation. 

CPs offer corporates a cost-effective alternative to borrowing from banks. Investors, such as mutual funds, often invest in CPs as they offer relatively high returns with short-term liquidity.

 

4. Certificate of Deposit (CD) – a negotiable, unsecured money market instrument with original maturity up to one year which are issued by banks.

 

Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. 

 

Entities eligible to issue CDs are:

 

> Scheduled Commercial Banks

> Regional Rural Banks

> Small Finance Banks. 

 
RBI has separate guidelines for CDs issued by the All India Financial Institutions (AIFIs).

 

Eligible investors in CDs are:

> all persons resident in India

 

Other RBI guidelines:

 

CDs shall be issued only in dematerialised form and held with a depository registered with SEBI. 

 

CDs shall be issued in minimum denomination of Rs 5 lakh and in multiples of Rs 5 lakh thereafter.
 

CDs shall not be issued for a period of less than seven days or more than one year.

 

Banks are not allowed to grant loans against CDs, unless specifically permitted by RBI. 

 

Example: 

A bank, say, Axis Bank, looking to meet its short-term liquidity needs may issue a CD to high networth individuals, corporates or mutual funds for a fixed period, say, 100 days, typically offering a higher interest rate than regular fixed deposit accounts.

CDs provide banks with an alternative way of raising short-term capital, while also offering investors a relatively safe investment option with a fixed return. 

  

 

5. Treasury Bills Market: This market deals with short-term borrowing by the central government or Government of India.

Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91 day, 182 day and 364 day. 

Treasury bills are zero coupon securities and pay no interest. Instead, they are issued at a discount and redeemed at the face value at maturity. 

 

For example, a 91 day Treasury bill of Rs 100/- (face value) may be issued at say Rs 98.20, that is, at a discount of say, Rs 1.80 and would be redeemed at the face value of Rs 100. 

The return to the investors is the difference between the maturity value or the face value (that is Rs 100) and the issue price.

 

T-Bills are considered virtually risk-free and are an integral part of India's money market.

 

RBI issues them, on behalf of central government, to meet the short term liquidity needs of the government.

 

 

Money market instruments in India include:
 

Call or notice money,
TREPs or Triparty repos,

Repo or Reverse Repo,
CPs,
Non-Convertible Debentures (NCDs) of original or initial maturity up to one year, 
CDs,
Cash Management Bills 
Treasury Bills, 

Mutual fund units,

Floating Rate Bonds or FRBs issued by Govt of India,
Government securities having an unexpired maturity up to one year, and 
Usance bills. 

 

Money market mutual funds in India typically invest in the above mentioned money market papers.  

 

 

Investment Implications for Investors 

 

Retail / high net worth investors can invest in CPs, NCDs and CDs directly.  

 

The primary channel for retail investors to invest directly in Treasury Bills is the RBI Retail Direct Scheme. Launched by RBI, this platform allows individual investors to directly open and maintain a Retail Direct Gilt (RDG) Account with the RBI.

One can also invest in T Bills indirectly or with the help of intermediaries through:

> Banks, Primary Dealers or Brokerage houses

> Gilt mutual funds, which invest predominantly in government securities. 

 

 

Relatively safer and easily accessible are mutual funds: 

 

If you have surplus money for investment for less than a year, you can invest in the following types of mutual funds to park your short term money:

 

Overnight Funds: They invest in overnight securities having maturity of one day.

Liquid Funds: They invest in debt & money market instruments with maturity of upto 91 days only.

Ultra Short Duration Funds: They invest in debt and money market papers with portfolio Macaulay Duration of between three and six months.

Low Duration Funds: They invest in debt and money market papers with portfolio Macaulay Duration of between six and 12 months.

Money Market Funds: They invest in money market instruments having maturity of upto one year. 

The definition of these categories of mutual funds are as per SEBI Categorization of Rationalization of mutual funds.  

 

Retail investors can use money market instruments as a safe, short-term investment to earn better returns than traditional savings accounts or fixed deposits. While direct access to some instruments like call money and TREPs is not available to retail investors, mutual funds and liquid funds offer a simple and effective way to participate in the money market, ensuring high liquidity and low risk.

If you're looking for a short-term, safe place to invest, debt mutual funds which invest in instruments with maturity of less than one year are a great option, providing easy access to otherwise restricted instruments.  

 

 

- - -

 

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References: 

 

RBI Master Direction Call / notice / term money market updated 08Jun2023

 

RBI Repo Transactions updated 01Jan2025 

 

RBI Commercial paper Master Direction 03Jan2024 

 

RBI Certificate of Deposits Master Direction 04Jun2021 

 

RBI Report of the Committee on MIBOR Benchmark 01Oct2024

 

SEBI Categorization and Rationalization of Mutual Funds 

 

RBI Master Circular on Call / Notice money market operations 01Jul2009 - NDS Call platform

 

RBI Determinants of Uncollateralised Money Market Volumes 23Jul2025 - call money, TREP, primary dealers, mutual funds, government flows, USD-INR forward premia, etc.

 

FBIL Financial Benchmarks India Pvt Ltd  

 

RBI Financial Markets weblink

 

RBI Financial Markets overview, including money market and forex market 

 

CCIL TR F-TRAC Platform for tracking trades on CDs, CPs, etc. 

 

Various tweets on TREPS / TREP 

 

Tweet 26Ju2025 RBI new market timings wef 01Jul2025 for call money, market repo, TREP and others 

 

CCIL Primer on TREPS or Triparty Repo Transactions 

 

Tweet 31Jan2019 CBLO replaced by TREPs

 

 

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Disclosure:  I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.

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