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Informist, Tuesday, Jun. 17, 2025

By Siddhi Chauhan

MUMBAI – Borrowing through certificates of deposits rose sharply Tuesday as banks tapped the short-term debt market to raise funds ahead of upcoming bond maturities, dealers said. In the remaining week, commercial papers worth INR 320.28 billion and CD worth INR 261.50 billion are set to mature, data available on Clearing Corp of India and compiled by Informist showed. 

A total of INR 79 billion was raised through CDs Tuesday, sharply up from INR 36 billion Monday. Punjab National Bank was the largest CD issuer Tuesday raising around INR 50 billion alone through two papers maturing in one month and three months at 5.88%. The state-owned bank was followed by Bank of Baroda which raised INR 20 billion through a three-month paper at 5.86%. 

Of the INR 261.50 billion CD maturity, CDs worth INR 86.50 billion issued by Punjab National Bank are set to mature on Wednesday, Thursday and Friday. Karur Vysya Bank also raised INR 5.0 billion Tuesday ahead of INR-7.5-billion CD maturity Wednesday. 

"While some banks are raising funds because of rollover demand others are doing so because of high credit offtake," a dealer at a state-owned bank said. "Credit offtake is usually high in quarter end so even banks who don't have maturity in this week are raising funds." On Monday, HDFC Bank was the sole issuer of CDs raising INR 36 billion through a one-month paper at 5.90%. 

In the CP segment, high rollover demand drove issuers to raise INR 107.75 billion through CPs. The National Bank for Agriculture and Rural Development was the largest CP issuer, raising INR 57 billion Tuesday ahead of its INR 41.75 billion maturity on Wednesday and Friday.

NABARD's CPs worth INR 6.75 billion matured on Tuesday. Other than NABARD, Bajaj Finance Securities also raised INR 15 billion through a three-month paper at 6.33%. On Monday, CPs worth INR 94.50 billion were raised with NABARD being the largest issuer. It raised INR 35 billion through two papers maturing in one month and three months at 5.90% and 5.95%, respectively.

Due to high redemption pressure, short-term debt borrowing costs are seen rising going forward, dealers said. "Redemptions are generally high in the quarter end so in the coming days short-term debt rates could rise significantly," a dealer at a brokerage fund said. "Even now if you see, the rates have started to rise." 

On Tuesday, indicative rates on three-month papers issued by non-banking financial companies rose by eight basis points to a level of 6.28-6.48%, while those on the three-month papers issued by manufacturing companies was similar to Monday's level of 5.96-6.12%. Rates on the three-month papers issued by banks were at 5.86-6.09% on Tuesday. 

--Primary market

* Aditya Birla Housing, Tata Power, Tata Housing Development, M&M Finance Ltd., BOB Cards, Pilani Investments, Sundaram Home Finance, Axis Securities, Birla Group Holdings, Bajaj Finance, and NABARD raised funds through CPs.

* Bank of Baroda, Punjab National Bank and Karur Vysya Bank raised funds through CDs.

--Secondary market

* Punjab National Bank's CD maturing Wednesday was traded six times at a weighted average yield of 5.2908%.

* L&T Metro Rail Ltd.'s CP maturing Wednesday was traded once at a weighted average yield of 5.5123%.

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 Deepshikha Bhardwaj

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