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Informist, Tuesday, Aug. 12, 2025

By Vidhushi RajPurohit

MUMBAI – No banks issued certificates of deposit for the second consecutive day as the borrowing rates in the short-term debt market remained elevated, dealers said. Lack of any urgent funding needs and banks meeting the rollover needs for August also limited primary market activity, they said. 

"There were two PSU banks who were trying to issue paper, but they did not get the rates they wanted, so the deals were not executed," a dealer at a state-owned bank said. "There is no urgency in the market for funds, so those who are not getting the rates that they want can afford to skip the issuance." So far this month, banks have issued CDs worth INR 253.85 billion, higher than the maturity sum of INR 193.30 billion for the month, according to data from Clearing Corp. of India collated by Informist.

The rates for three-month CDs were at 5.78-5.80%, while banks were looking to raise funds at around 5.75%, dealers said. Investors were also unwilling to lower the rates, owing to a rise in overnight rates, they said. The weighted average rate in the triparty market rose to 5.41% Tuesday from 5.35% the previous day.

The money market rates have surged since Friday, as banks have parked a cumulative INR 1.91 trillion with the central bank under two variable rate reverse repo, both of which are due for reversal on Friday. The surplus liquidity in the banking system, as indicated by the central bank's net absorption of funds, was at INR 2.77 trillion on Monday. Rates of short-term papers in the secondary market also remained high on account of elevated overnight rates and tight liquidity conditions post the variable rate reverse repo auctions, dealers said. 

"There is no positivity in the market regarding rates due to the regular VRRR (variable rate reverse repo) auctions," a dealer at a mid-size brokerage firm said. "This is leading to some pressure on rates in the (secondary) market."

In the commercial paper segment, companies and non-banking financial companies raised INR 40.50 billion Tuesday, sharply up from INR 13.25 billion Monday. CP issuances climbed higher on the back of the big-ticket issuance by Reliance Retail Ventures, raising INR 30 billion through a three-month paper at 5.92%. The company has CPs worth INR 93 billion due for maturity in August, of which INR 39.50 billion will mature Thursday. The other major CP issuer was Poonawalla Fincorp, which borrowed INR 9 billion at 6.42% through a three-month paper. The non-banking financial company has CPs worth INR 18 billion maturing in August. 

--Primary market

* Reliance Retail Ventures, IGH Holdings, and Poonawala Fincorp raised funds through CPs

* No banks raised funds through CDs

--Secondary market

* Axis Bank's CD maturing Wednesday was traded five times at a weighted average yield of 5.4057%

* ICICI Securities'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 Saji George Titus

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