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Informist, Tuesday, Sep 3, 2024

By Richard Fargose

MUMBAI – Issuances of commercial papers and certificates of deposits remained firm today as companies and banks tapped the market to refinance the maturing papers, dealers said.

Fundraising through commercial papers today topped the 100-bln-rupee mark for the second session in a row. So far today, CPs worth 114.75 bln rupees have been issued, compared with 110.75 bln rupees issued on Monday.

Of the total, Reliance Jio Infocomm raised 37.25 bln rupees via three-month papers at 7.27%. This was followed by National Bank for Agriculture and Rural Development, which raised 20.00 bln rupees via three-month papers at 7.24%

Market participants said the company tapped the market to roll over papers set to mature in the coming days. National Bank for Agriculture and Rural Development has CPs worth 211.75 bln rupees that are due to mature this month, of which CPs worth 71.75 bln rupees are to mature this week. Similarly, Reliance Jio Infocomm has 51-bln-rupee worth of CPs due for maturity this month.

Banks also raised funds to roll over maturing papers. Banks raised CDs worth 48.25 bln rupees today, as against 45.25 bln rupees on Monday.

Bank of India raised 37.25 bln rupees via 3-month CDs at 7.27%, and Indian Overseas Bank raised 10 bln rupees through three-month papers at 7.32%.

Market participants said banks raised funds to refinance the maturing CDs and also to meet their funding requirements amid the credit-deposit growth imbalance.

With credit growth outpacing deposit growth, many banks have raised their deposit rates and are increasingly relying on other resources like certificates of deposit to fund their asset growth.

As per latest data, banks' loan book growth remained higher than that of bank deposits. Bank deposits grew 10.9% on year to 213.28 trln rupees as of Aug 9, compared with loan book growth of 13.6% on year.

Despite the surge in issuances, rates were steady as these papers were easily absorbed by mutual funds demand, dealers said.

Rates on three-month CPs issued by non-banking finance companies were steady at 7.60-7.65%, and those on papers of similar maturities issued by manufacturing companies were unchanged at 7.25-7.30%. Rates on CDs maturing in three months were at 7.20-7.25%.

--Primary market

* Reliance Jio Infocomm, National Bank For Agriculture And Rural Development,

Mahindra & Mahindra Financial Services, SBI Capital Securities, Kotak Securities, ICICI Securities, Godrej Industries, Bajaj Financial Securities, Motilal Oswal Financial Services, Tata Capital, Mahindra & Mahindra Financial Services, and Axis Securities raised funds through CPs

* Bank of India, Indian Overseas Bank, and Punjab National Bank raised funds via CDs.

--Secondary market

* HDFC Bank's CD maturing on Wednesday was dealt five times at a weighted average yield of 6.3515%.

* Reliance Jio Infocomm Ltd’s CP maturing on Sep 18 was dealt twice at a weighted average yield of 7.0007%.

At 1700 IST, the following were the volumes, in bln rupees, in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:

End

Edited by Deepshikha Bhardwaj

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