More Stories

Informist, Thursday, Jul. 10, 2025

By Vidhushi RajPurohit

MUMBAI – Fundraising through certificates of deposit rose Thursday on account of a big-ticket issuance by Axis Bank Ltd. The private-sector bank mopped up INR 45 billion at 6.25% through a 10-month paper. Market participants said Axis Bank tapped the market ahead of the upcoming maturities for July, which cumulatively amount to INR 45 billion. Other than this, no other bank tapped the CD market for the second consecutive day as traders cited the slow credit offtake at the start of quarter and low amount of outstanding certificates of deposit for July as the reason for dull activity from banks' side. 

The surplus liquidity--as indicated by the central bank's net absorption of funds from the banking system--stands above INR 3 trillion with no significant scheduled outflows to put strain on it, banks continue to remain in a comfortable funding position, they said. Thus muting the borrowing incentive for banks. On Wednesday, the RBI net absorbed INR 3.27 trillion from the banking system. 

"The credit offtake is usually slow for June because the quarter just starts and when it picks up near the end of quarter borrowing (from banks) also rises," a dealer at a state-owned bank said. 

Some banks also stayed away from the primary market on caution due to expectations of the RBI announcing a variable rate reverse repo auction for Friday, dealers said. Traders expect another auction as two such auctions worth INR 1.97 trillion are due for reversal Friday. Dealers estimate the notified amount of the auction at INR 1.5 trillion to INR 2 trillion. Amidst low activity, indicative rates on three-month CD remained unchanged at 5.75-5.80%. 

On account of high surplus liquidity, the rates in the secondary market were also low which prompted banks to deploy their surplus funds to other investing avenues like government securities instead of CD, dealers said. Consequently, the total CD turnover in the secondary market fell. The total traded volumes of CDs in the secondary market were INR 36.20, down from INR 52.20 billion Wednesday.

"Liquidity is high but why will we buy CD when the returns are low there? So there is a wait now for the rates to go up and then there will more activity there," a dealer at a private sector bank said. "If there is a VRRR auction tomorrow (Friday), then maybe the rates will also rise."

In the commercial papers side, three companies raised INR 12.10 billion Thursday, up from INR 5 billion raised Wednesday. L&T Finance was the largest CP issuer, borrowing INR 9 billion via two CP of different maturities. It raised INR 6.5 billion via a five-month CP at 6.23% and issued a seven-month paper at 6.33% to raise INR 2.50 billion. 

--Primary market

* L&T Finance, HDFC Securities and ICICI Securities raised funds through CPs.

* Axis Bank raised funds through CDs.

--Secondary market

* Axis Bank's CD maturing Tuesday was traded once at a weighted average yield of 5.4499%.

* NTPC Ltd's CP maturing Friday was traded eight times at a weighted average yield of 5.3663%.

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 Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.