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Informist, Tuesday, May 20, 2025

By Kabir Sharma

MUMBAI – Total amount of funds raised through commercial papers rose Tuesday on the back of a big-ticket issuance by the National Bank of Agriculture and Rural Development Bank. The non-banking financial lender borrowed INR 50 billion through CPs maturing in three months.  

NABARD raised the lion's share of the total INR 57.50 billion borrowed in the CP market on Tuesday. In terms of rates too, NABARD raised the funds at just 6.38% for three-month tenure, which was 30-40 basis points lower than other borrowers. Dealers said rates in the overall money market have eased on the back of expectations of a 25 bps rate cut at the Monetary Policy Committee meeting in June.  

"Rates have come down, it looks like they might come down (for 3-month CD) to 6.40% especially when the market is looking at a cut in repo rate of more than 25 bps," a dealer at a private sector bank said. Dealers said rates in the market have also eased on the back of ample liquidity being available in the system. 

On Monday, the Reserve Bank of India had net absorbed INR 1.94 trillion from the banking system, down from INR 2.12 trillion Sunday. Banks had parked INR 2.34 trillion with the RBI at the Standing Deposit Facility, up from INR 1.76 trillion Sunday.

SBI Capital Securities Ltd. raised INR 1 billion via a three-month paper at 6.75%, while Cholamandalam Finance raised INR 3.25 billion via a one-year paper at 7.15%. SBI Global Factors also raised INR 750 million on Tuesday. 

In certificate of deposits, UCO Bank raised INR 15 billion on Tuesday via two different papers maturing in one year. The bank got a rate of 6.85% on the INR 10 billion paper, while the 5 billion paper was issued at a slightly lower rate of 6.83%. IDFC First Bank also raised INR 5 billion on Tuesday. However, the bank got a much better rate as it raised the funds at 6.68%.   

Rates in the short-term debt market were slightly slower Monday. Indicative rates on three-month CPs issued by non-banking finance companies were lower at 6.60–6.80% Tuesday. Rates on similar-tenor papers by manufacturing firms were steady at 6.55–6.75%, while those by banks were quoted at 6.34-6.55%.

--Primary market

* NABARD, SBI Capital Securities Ltd., SBI Global Factors, Tata Capital Housing, Cholamandalam Finance raised funds through CPs.

* UCO Bank and IDFC First Vabj raised funds through CDs.

--Secondary market

* Bank of Baroda's CD maturing Friday was traded once at a weighted average yield of 6.4883%.

* Tata Motors Fiance Ltd's CP maturing Wednesday was traded 7 times at a weighted average yield of 5.7932%.

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 Tanima Banerjee

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