This is the second instance of call rates zooming after the Reserve Bank of India embarked on a rupee-rescue operation on August 20. The central bank hiked the CRR to 11 per cent and raised the repo rate to 8 per cent to make money dearer and discourage banks from arbitraging between forex and call markets.

The call rates shot up to 45 per cent last Friday immediately after the announcement was made by the RBI.

A few deals were struck at 22-25 per cent on Saturday morning. Foreign banks were seen borrowing funds from the interbank market at this stage, money market dealers said. However, the rates eased during the day to 13-16 per cent and finally closed at 9.50-10 per cent -- higher than the fixed repo rate and export refinance rate.

According to money market dealers, lenders were holding back funds in the early trading hours on Saturday expecting a further hike in the rates.

However, they could not make a killing as there were very few borrowers in the market and, consequently, the call rates eased in the afternoon.

"Banks preferred to deploy money in the call market and make a wider spread than availing of the repo window, which is why RBI could mop up only Rs 50 crore through its four-day fixed rate repo at 8 per cent. Most deals were struck at the 13-16 per cent level," one dealer said. Dealers maintained that most banks are sufficiently liquid and they currently do not need short-term funds. Around Rs 4,000 crore is expected to come into the system next week as a few fixed rate repos mature and an additional Rs 475 crore is expected to come on August 31 on account of the redemption of 14-day treasury bills.

"However, even this inflow will not be able to stabilise the imbalance in the system. The Resurgent India Bond proceeds are not likely to come into the system immediately and the call rates are expected to remain tight," said I-Sec's MR Madhavan.