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Informist, Thursday, Jul. 3, 2025

By Vidhushi RajPurohit

MUMBAI – Funds raised through commercial paper surpassed INR 100.00 billion Thursday as borrowing rates dipped with a rise in the systemic liquidity surplus, dealers said. Surplus funds with mutual funds, which are major investors in short-term debt paper, also kept the market active, they said.

The Reserve Bank of India's net liquidity absorbed--a proxy for the systemic liquidity surplus--was INR 3.75 trillion Wednesday, the highest since Jun. 1, 2022, data from the central bank showed. Consequently, banks were also likely to have deployed their surplus funds and invested in debt paper in the secondary market, dealers said.

Turnover in the secondary market, therefore, rose. The total certificates-of-deposit turnover in the secondary market rose to INR 73.85 billion Thursday, up from INR 58.30 billion Wednesday. The total trades in the secondary market for commercial paper also rose to INR 46.40 billion from INR 18.00 billion the previous day.

Active participation by investors kept borrowing rates low, which in turn led to greater issuances in the primary market, dealers said. Indicative rates on three-month paper issued by manufacturing companies were 5.90-5.95%, down from 6.00-6.05%. For certificates of deposit, the rates for three-month issuances were 5.79-5.88%.

The rise in issuances was led by non-banking entities as most banks refrained from borrowing owing to the increased liquidity surplus. Total funds raised through CP amounted to INR 126.25 billion Thursday, sharply up from INR 4.50 billion raised Wednesday. Reliance Jio Infocomm Ltd. was the largest issuer for the day, borrowing INR 41.00 billion through a paper maturing in September at 5.73%.

On the CD front, big-ticket issuances pushed up the total amount raised Thursday to INR 47.00 billion, from INR 6.50 billion the previous day. Small Industries Development Bank of India and Bank of Baroda were the two big CD issuers for the day, cumulatively raising INR 39.00 billion. Bank of Baroda raised INR 20.00 billion through a three-month paper at 5.78%. The state-owned bank has an outstanding maturity of INR 10.00 billion for the month. SIDBI issued a one-year CD and borrowed INR 19.00 billion at 6.23%. 

Dealers were of the view that more banks are likely to tap the short-term debt market in the coming weeks to roll over maturing paper for the month, which cumulatively stands at INR 230.95 billion. "Some banks can redeem, but there are still good returns, so it will make more sense to hold on to their papers even though liquidity is high," a dealer at a private-sector bank said. 

The muted participation by banks is also on account of the start of the quarter, when issuers generally tend to avoid issuing paper. "If banks raise funds now, then the maturity of the papers will fall on quarter-crossing, which is costlier from the borrowers' perspective," the dealer quoted above said.

-Primary market

* L&T Finance Ltd., Reliance Retail Ventures Ltd., Reliance Jio Infocomm, Network18, NTPC Ltd., and Godrej Properties Ltd. raised funds through CP.

* Bank of Baroda, Punjab National Bank, and SIDBI raised funds through CD.

--Secondary market

* Bank of Baroda's CD maturing Jul. 9 was traded twice at a weighted average yield of 5.4529%.

* NTPC Ltd's CP maturing Jul. 11 was traded once at a weighted average yield of 5.4496%.

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 Rajeev Pai

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