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Informist, Wednesday, Aug. 20, 2025

By Vidhushi RajPurohit

MUMBAI – Total issuances of certificates of deposit jumped Wednesday, pushed up by big-ticket borrowing by IndusInd Bank. Total CD issuances rose to INR 67.50 billion from INR 10 billion on Tuesday. Meanwhile, the borrowing rates for three-month CDs were largely steady on Wednesday. 

IndusInd Bank tapped the short-term debt after five months and raised INR 50 billion through a three-month CD at 6.30%. The borrowing rate was sharply higher for the private sector lender due to investors' reluctance to invest in the bank's debt following the disclosure of certain accounting discrepancies in its derivatives accounting and microfinance loan portfolio. The private sector lender paid a premium of over 45 basis points above the prevailing rate of 5.80-5.85% for three-month CDs, dealers said.

The private sector bank likely tapped the debt market to rollover the papers which are due for maturity in August, dealers said. The bank has CDs worth INR 60 billion due for maturity this month, data from the Clearing Corp. of India showed.

"The bank is still facing some difficulty in raising funds from the market, and that's why the rate was higher for it. But other than that, the market rates are still at the same level," a dealer at a state-owned bank said. The other major CD issuer was Canara Bank, which raised INR 10 billion through a three-month paper at 5.74%. 

The CD rates are expected to inch higher in the coming days on account of the outflows for goods and services tax payouts, which are expected to drain around INR 1.85 trillion from the banking system, dealers said. Following the tax outflows, dealers expect the money market rates to inch up, with some expecting the central bank to conduct a variable rate repo auction, which could cool off the rates. Near-month-end rates are also expected to remain under pressure as mutual funds will likely face a cash crunch due to redemption pressure, dealers said. According to RBI data, the central bank's net absorption, an indicator of liquidity surplus in the system, was INR 2.99 trillion on Tuesday.

On the commercial papers front, total issuances fell to INR 15.75 billion Wednesday from INR 60 billion on the previous day. Sundaram Finance was the top issuer, raising INR 11 billion through two papers. The non-banking finance company raised INR 5 billion through a six-month paper at 6.39% and INR 6 billion via a one-year paper at 6.68%. The other major issuer was Godrej Properties, which raised INR 2.25 billion through a three-month paper at 5.96%. 

--Primary market

* Godrej Industries, Godrej Properties, Birla Group Holdings and Sundaram Finance raised funds through CPs

* IndusInd Bank, Canara Bank and Karur Vysya Bank raised funds through CDs

--Secondary market

* Bank of Baroda's CD maturing Thursday was traded five times at a weighted average yield of 5.4716%

* Tata Capital's CP maturing Thuesday was traded twice at a weighted average yield of 5.4712%

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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