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Informist, Tuesday, Jul. 29, 2025

By Vidhushi RajPurohit

MUMBAI – Most banks remained on the sidelines for the second day Tuesday with only one certificate of deposit being issued. Bank of Baroda was the sole CD issuer, raising INR 20.00 billion via paper maturing in three months at 6.05%. Traders cited the lack of funding need and banks having met their rollover target for CD issuances for the month as reasons for the dearth of activity in the primary market. 

"It is based on individual needs and banks have met most of their funding requirements for this month, so we are not seeing much activity from their side now," a dealer at a mid-size broking firm said. "Liquidity is also comfortable for them, so why will they want to borrow now?"

Monday, the net liquidity absorbed by the RBI--a proxy for the systemic liquidity surplus--was INR 2.24 trillion. Banks also parked INR 460.58 billion with the RBI at the three-day variable rate repo auction. Traders expect inflows from the government's month-end spending to begin Wednesday, which will add around INR 1.50 trillion to the system. Moreover, in July, banks have exceeded their rollover needs by issuing CD worth INR 344.60 billion against maturing paper worth INR 230.95 billion, data compiled by Informist showed.

The indicative rates for three-month CD remained unchanged from the previous day's levels at 5.75-5.95%. Traders anticipate CD issuances to pick up next month as more banks tap the market to roll over paper maturing in August. Currently, paper due to mature in August amounts to INR 193.33 billion.

Commercial paper issuances also dropped to INR 8.00 billion from INR 40.00 billion raised Monday. Lower appetite from mutual funds, which are the major investors, and reduced funding needs near the month-end resulted in issuances in the primary market being subdued. ICICI Securities raised INR 5.00 billion via paper maturing in three months at 6.28%. The other major issuer was Bajaj Financial Securities, which raised INR 1.50 billion via paper maturing in September at 6.17%.

"Mutual funds are facing their month-end redemption, so not much activity is seen from their side," a dealer at a state-owned bank said. "Some are liquidating shorter-tenure papers in the secondary market. Insurance companies were also active today in the secondary market." 

--Primary market

* ICICI Securities, Godrej Industries, and Bajaj Financial Securities raised funds through CP.

* Bank of Baroda raised funds through CD.

--Secondary market

* Bank of India's CD maturing Wednesday was traded three times at a weighted average yield of 5.3684%.

* L&T Finance's CP maturing Wednesday was traded three times at a weighted average yield of 5.4028%.

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 Rajeev Pai

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