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Informist, Thursday, Aug. 7, 2025

By Vidhushi RajPurohit

MUMBAI – Issuances of certificates of deposit remained low as traders cited low rollover requiments for August. Low funding needs at the start of the month as the surplus liquidity in the banking system stayed near INR 4 trillion also kept banks away from the short-term debt market, they said. 

Bank of Baroda was the sole CD issuer Thursday, raising INR 20 billion through a six-month paper at 6.05%. So far, the total CD due for maturity this month amounts to INR 193.30 billion, lower than INR 230.95 billion which was in July. 

"It's the same every month, borrowing starts picking up gradually because everyone is sitting on surplus funds after (month-end) inflows," a dealer at a state-owned bank said. "Some money is locked up in VRRR auctions also but that is a transient thing and banks manage that through money market."

As per the latest RBI data, the central bank net absorbed INR 3.91 trillion from the banking system Wednesday, little changed from the INR 3.97 trillion Tuesday. So far, banks have parked a cumulative sum of INR 2.89 trillion with the RBI under three separate variable rate reverse repo auctions. All the three auctions are due for reversal on Friday. 

On the commercial papers front, companies and non-banking financial lenders borrowed INR 38.50 billion Thursday, slightly up from INR 25.50 billion raised Wednesday. L&T Ltd. was the major borrower, raising INR 20 billion through a paper maturing in September at 5.78%. The other big issuer was Bajaj Housing Finance which mopped up INR 12 billion through a six-month paper at 6.12%. 

The rates for short-term debt instruments setteled largely unchanged from Wednesday's close after rising by two to three basis points during the day, dealers said.

"Rates went up slightly becuase of MPC as they kept rates steady but then there were not many issuances and liquidity is also comfortable so at the end market was again flattish," a dealer at a mid-size brokerage firm said. The RBI's Monetary Policy Committee kept the policy rates unchanged and held the repo rate steady at 5.50% and retained the neutral policy stance. The decision was as per traders' expectations but no indication of further policy easing impacated the market's sentiment which led the rates to inch up, dealers said. 

The indicative rates for three-month CPs issued by manufacturing companies were steady at 5.80-5.85%. For non-banking financial institutions, the rates for three-month papers were at 6.25-6.28%, the same as Wednesday. The indicative rates for the three-month CDs were also unchanged from Wednesday at 5.75-5.80%.

--Primary market

* L&T Ltd., Bajaj Housing Finance, Aditya Birla Money, Julius Baer Capital and HDB Finance raised funds through CPs

* Bank of Baroda raised funds through CDs

--Secondary market

* Bank of Baroda's CD maturing Friday was traded five times at a weighted average yield of 5.3819%

* Indian Oil Corp.'s CP maturing Friday was traded four times at a weighted average yield of 5.3922%

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 Akul Nishant Akhoury

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