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Informist, Thursday, Jan. 16, 2025

By Siddhi Chauhan 

MUMBAI – Borrowing through certificates of deposit remained robust on Thursday as the rates on three-month paper fell by five basis points during the day, dealers said. The rates on the three-month CD fell to 7.50-7.55% on Thursday against 7.55-7.60% on Wednesday. 

The cooling-off in the rates happened as the Reserve Bank of India announced on Wednesday that it will conduct daily variable rate operations from Thursday, dealers said. However, the fall in the rates was limited as the repo operations will not provide durable support to the banking system's liquidity, dealers said. 

"CD rates have not been impacted significantly, we have seen a fall of just five basis points. Daily VRRs only help in the transient liquidity part and not in core liquidity," a dealer at a private bank said. "In the short-term debt market, the major buyers are mutual funds, who get funds when core liquidity is increased."

Issuances of CDs were robust on Thursday, though they were marginally lower than the previous day. The issuances were sharply higher than the average daily issuances of INR 22.5 billion this week. During the day, CDs worth INR 82.50 billion were issued against INR 90 billion on Thursday. Punjab National Bank was the largest issuer, raising a total amount of INR 32.50 billion through two CDs maturing in three months and one year at 7.50% and 7.64%, respectively. 

On Wednesday, the National Bank for Agriculture and Rural Development was the largest issuer of CDs, raising INR 50 billion through a one-year paper at 7.72%.

Issuance of commercial papers fell to INR 24.50 billion from INR 63.25 billion on Wednesday. The issuances were lower on Thursday as issuers had borrowed heavily earlier this week ahead of upcoming redemptions, dealers said. This week, till Wednesday, issuers have raised INR 133.25 billion through CPs. According to data compiled by Informist, CPs worth INR 879.29 billion are set to mature in January.

On Thursday, the National Bank for Agriculture and Rural Development was the largest CP issuer, raising INR 20 billion through a three-month paper at 7.53%. On Wednesday, Bajaj Finance was the largest issuer, raising INR 40.25 billion through a three-month paper at 7.90%.

The rates on three-month CPs issued by manufacturing companies fell to 7.50-7.60% against 7.55-7.60% on Wednesday, dealers said. Rates on similar-maturity CPs issued by non-banking finance companies were flat at 7.70-7.75%. 

--Primary market

* National Bank for Agriculture and Rural Development, Aditya Birla Finance Ltd, Aditya Birla Housing Finance, IGH Holdings raised funds through CPs.

* Punjab National Bank, Indian Bank, IndusInd, Bank of Baroda raised funds through CDs.

--Secondary market

* National Bank for Agriculture and Rural Development's CD maturing on Jan. 17 was traded six times at a weighted average yield of 6.5435.
* Panatone Finvest Ltd's CP maturing on Jan. 17 was traded twice at a weighted average yield of 6.6352%.

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by the Clearing Corp. of India's F-TRAC platform:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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