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Informist, Wednesday, Aug. 13, 2025

By Vidhushi RajPurohit

MUMBAI – Issuances of certificates of deposit remained subdued Wednesday, with Bank of Baroda being the sole bank to tap the short-term debt market. The subdued activity in the primary market was mainly on account of an uptick in the borrowing rates, dealers said. Moreover, most banks are on the sidelines as they have already met the rollover needs for August.

Bank of Baroda raised INR 25 billion by issuing a three-month paper at 5.83%. The indicative rates for three-month CDs rose to 5.82-5.87%, from 5.78-5.80% Tuesday. The rate rose due to an uncertain outlook on the domestic policy rate trajectory, dealers said. 

"It looks like traders are factoring in now that maybe there will not be a rate cut in the upcoming policy and we are also nearing quarter crossing when rates usually are slightly higher," a dealer at a state-owned bank said. "The inflation figure also did not provide any cues to the market, as most were expecting it to come lower only." Data released Tuesday showed India's CPI inflation fell to an eight-year low of 1.55% in July.

A spike in overnight money market rates also weighed on the CD rates, dealers said. The weighted average rates in the money market have climbed higher since Friday, as banks have parked nearly INR 2 trillion with the Reserve Bank of India under two variable rate reverse repo auctions, which will reverse Thursday. The surplus liquidity in the banking system, as indicated by the central bank's net absorption of funds, was at INR 2.63 trillion on Tuesday. 

Issuances of commercial papers fell Wednesday. Companies and non-banking financial companies raised INR 28 billion, down from INR 40.50 billion Tuesday. Kotak Securities was the major issuer Wednesday, raising INR 6.50 billion through a three-month paper at 6.35%. The other big issuer was Jio Credit, which raised INR 5.50 billion through a three-month paper at 6.25%.

Some dealers also cited reduced appetite from mutual funds as the reason for lacklustre issuances. In the secondary market, fundhouses were also seen selling papers of short tenures likely to liquidate some funds, dealers said. 

--Primary market

* Aditya Birla Housing Finance, Jio Credit, ICICI Securities, Kotak Securities, Bajaj Finance Securities and Motilal Oswal Financial Services raised funds through CPs

* Bank of Baroda raised funds through CDs

--Secondary market

* Axis Bank's CD maturing Thursday was traded twice at a weighted average yield of 5.4028%

* Bharti Telecom's CP maturing Thursday was traded six times 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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