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Informist, Tuesday, Apr. 22, 2025

By Siddhi Chauhan

MUMBAI – Banks remained away from primary market issuances Tuesday as dealers reasoned that borrowing requirements have eased on comfortable funds in the banking system, dealers said. Low redemption needs and slower-credit offtake in April also added to little interest from banks to raise funds through certificates of deposit.

"There is very little need for fund from banks' side right now as it is usual in the beginning of every financial year," a dealer at a state-owned bank said. "The period of deficit liquidity has also passed now so on that front also there is comfort. RBI (Reserve Bank of India) is also active to ensure that there is sufficient liquidity so banks are not really concerned with funding needs for now."

So far this month, the RBI has bought gilts worth INR 1.0 trillion through open market operations. Another INR 200 billion will be added into the banking system as the central bank is scheduled to purchase gilts through OMO auction next week.

At the conclusion of RBI's Monetary Policy Committee meeting on Apr. 9, Governor Sanjay Malhotra had said the RBI would ensure "sufficient" and "adequate" provision of liquidity such that it is in surplus to the tune of around 1% of banks' net demand and time liabilities. This amounts to over INR 2 trillion. As per the latest data from RBI, the central bank net absorbed INR 462.35 billion Monday from the banking system–-a proxy for liquidity surplus––down from INR 1.00 trillion Sunday.

Contrary to the CD segment, issuances through the commercial paper market rose Tuesday largely due to big-ticket issuance by Mangalore Refinery and Petrochemicals Ltd. and Bharat Heavy Electricals Ltd. MRPL raised INR 20 billion through three-month paper at 6.57% and BHEL raised INR 6.50 billion through a three-month paper at 6.89%. On Monday, Cholamandalam Finance was the largest issuer of CP as it raised INR 6 billion through a six-month paper at 7.17%. Had it not been for these issuances, CP issuance wouldn't have been significantly high as most issuers have fulfilled their borrowing requirements, market participants said.

Indicative rates for three-month CD, the most liquid tenure, were flat at 6.45-6.50% Tuesday. The indicative rates on the three-month papers issued by manufacturing companies were at 6.50-6.89%, while those issued by non-banking financial companies were similar to 6.70-90% seen Monday.

--Primary market

* MRPL, BHEL, Aditya Birla Housing Finance, Godrej Industries, Aditya Birla Capital, and Bajaj Finance raised funds through CPs.

* No funds were raised through CD.

--Secondary market

* Bank of Baroda's CD maturing Friday was traded once at a weighted average yield of 6.2447%.

* Reliance Jio Infocomm Ltd.'s CP maturing Wednesday was traded twice at a weighted average yield of 6.0162%.

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 Ashish Shirke

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