UPDATE 1-India call money ends steady on cash, volumes thin

(Updates to close)

MUMBAI, Nov 4 (Reuters) - Indian cash rates ended steady on Wednesday on surplus liquidity in the system, but volume in the inter-bank segment was down as banks mostly borrowed from the collateralised market at cheaper rates.

After the central bank raised the statutory liquidity ratio (SLR), or the portion of deposits banks have to hold in government securities, to 25 percent from 24 earlier, at a policy review last week, banks have stepped up buying bonds.

The new SLR comes effective only on Nov. 7 and until then, banks are free to encash their excess securities, traders said.

The overnight call money INROND= ended at 3.20/30 percent, unchanged from its previous close.

"Many banks are holding securities 2-3 percent more than the mandated limit and they are trying to utilise that," said the chief dealer at a state-run bank.

Volume in the call money market was 37.05 billion rupees, down from 52.41 billion rupees on Tuesday. In CBLO, it was 611.69 billion rupees, data from Clearing Corp of India showed.

The Reserve Bank of India holds its liquidity adjustment auctions on a daily basis at which it absorbs excess funds from banks at 3.25 percent and lends to needy ones at 4.75 percent.

Even as cash is ample in the banking system, the inter-bank call money finds a floor at the reverse repo rate as lenders there can deploy their funds with the RBI at that rate.