At 12:56 p.m. (0726 GMT) the one-day cash rate was at 8.95/9.00 percent compared with Friday's close of 8.50/8.60 percent.
"It is a new reporting fortnight, so demand for funds is there and liquidity is still very much in the deficit zone. So cash rates should hold around current levels," said a trader with a large state-owned bank.
Demand is typically strong in the first week of the reporting cycle as most banks prefer to meet reserve needs as soon as possible in order to cut exposure to possibly volatile fund rates in the later half due to last-minute flows.
Banks borrowed 1.17 trillion rupees ($21.95 billion) from the Reserve Bank of India's repo counter under the liquidity adjustment facility on Monday, higher than 1.15 trillion rupees on Friday.
But cash rates are not forecast to rise sharply from current levels as advance tax payments by companies last month are expected to return in the form of government spending in coming days.
Call market volume was at 189.17 billion rupees, compared with a total of 204.98 billion rupees on Friday, data from the Clearing Corp of India showed.
In the collateralised borrowing and lending obligation (CBLO) market, the volume was 174.75 billion rupees, compared with a total of 194.85 billion rupees in the previous session.
The weighted average rate in the call money market was at 8.99 percent, higher than 8.91 percent on Friday. In the CBLO market, the average rate rose to 8.53 percent from 6.99 percent.
In the inter-bank repo market, volumes were at 55.78 billion rupees, compared with a total of 85.54 billion on Friday. The weighted average rate was at 8.58 percent from 8.39 percent.