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Informist, Monday, Mar. 17, 2025

By Siddhi Chauhan

MUMBAI – Fundraising through the short-term debt market rose slightly on Monday as corporate borrowers rolled over their maturing papers, dealers said. Widening of the liquidity deficit also prompted banks to tap the short-term debt market, they said.

On Monday, banks borrowed INR 87 billion through certificates of deposits against INR 60 billion on Thursday, while companies borrowed INR 16.25 billion through commercial papers, marginally up from INR 13.50 billion on the previous day. Money markets were shut on Friday on account of Holi. 

The liquidity deficit in the banking system widened due to outflows for corporate advance tax which likely drained around INR 2 trillion since Thursday. Advance tax outflows of around INR 800 billion to INR 1 trillion are expected to have taken place on Monday, dealers said.  

As per the latest Reserve Bank of India data, net liquidity injected by the central bank – a proxy for systemic liquidity conditions – was at INR 2.07 trillion on Sunday against INR 2.10 trillion on Saturday. The net liquidity injected had risen to INR 2.22 trillion on Friday, the highest level since Feb. 23. 

On Monday, Canara Bank was the largest CD issuer raising INR 40 billion through a three-month paper at 7.55%. HDFC Bank and Union Bank raised INR 20 billion each through three-month CDs at 7.58% and 7.57%, respectively. On Thursday, Punjab National Bank was the largest CD issuer, raising INR 25 billion through a three-month CD at 7.56%, followed by Bank of India, which raised INR 15 billion through a three-month paper at 7.63%.

Heavy redemptions scheduled for this month drive CD issuances, dealers said. Certificates of deposit worth INR 1.64 trillion are due for redemption in March, as against INR 1.36 trillion in February. "Issuers are keen to raise funds right now because of heavy maturity in March. Most of the demand that we are seeing right now is rollover-based only," a dealer at a brokerage firm said. 

Similar was the case with the CP issuances. Borrowing through CPs rose due to large redemption scheduled for the month, dealers said.  CPs worth INR 2.04 trillion are maturing this month, up from INR 1.33 trillion in February. Kotak Securities was the largest CP issuer, raising INR 7 billion through a three-month paper at 7.93%. On Thursday, HDFC Securities was the largest issuer, raising INR 5.50 billion through a three-month paper at 7.92%.

Rates on three-month CDs were unchanged at 7.55-7.65% on Monday. Rates on three-month CP of non-banking finance companies were also unchanged from the previous day at 7.82-8.03%. Rates on CP issued by manufacturing companies were at 7.65-7.85% Monday.

--Primary market

* HDFC Bank, Bank of Baroda, Indian Bank, Union Bank and Canara Bank raised funds via CDs.

* Kotak Securities, Bajaj Finance, ICICI Securities, and National Bank for Agriculture and Rural Development raised funds via CP.

--Secondary market

* Union Bank's CD maturing on Tuesday was traded 10 times at a weighted average yield of 6.4317%.

* Indian Railway Finance Corp.'s CP maturing Tuesday was traded thrice at a weighted average yield of 6.4321%.

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

Edited by Saji George Titus

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