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By Shravani Chandiwade

Informist, Tuesday, Sept. 9, 2025

MUMBAI – Primary issuances in the short-term debt market picked up some pace after two days of relative inactivity. Banks tapped the market to meet some roll-over requirements, dealers said. At the same time, issuances of commercial papers jumped after the uncertainty around the long weekend, with the market holiday for Id-e-Milad shifted to Monday from Friday.

The cash reserve ratio cut of 0.25% of banks' net demand and time liabilities by the Reserve Bank of India effective Saturday added to the comfortable liquidity surplus in the banking system, dealers said. As per the latest data, the RBI net absorbed INR 2.36 trillion on Monday, lower than INR 2.52 trillion. Banks' requirements to maintain cash with the central bank fell by over INR 590 billion in the fortnight starting Saturday from the previous fortnight.

"The current liquidity surplus in the banking system is comfortable, plus CRR cut happened on Saturday also eased the cash reserve requirements with the central bank. Hence, many issuers stayed on the sidelines," a dealer at a state-owned bank said.

"As this is a quarter-end period, banks want to maintain their financials," the dealer said. "Aggresive borrowing via CD will not reflect well on their second quarter (Jul-Sept) results, hence banks did not tap the CD market unless it was really needed." Banks have to set aside extra cash for short-term debt issued in the last month of the quarter due to liquidity coverage ratio requirements.

Only two banks tapped the market. Bank of Baroda was the big issuer, raising INR 32.00 billion through a six-month paper at 6.15%. The second issuer was Axis Bank as it issued its first CD in the month. The bank borrowed INR 7.50 billion through a three-month paper at 5.86%. The private sector lender has total CDs of INR 67.25 billion maturing this month.

The indicative rates for three-month CDs were 5.80–5.88% and those on six-month CDs were 6.05–6.16%. Rates for one-year papers were 6.30–6.35%. 

Issuances of commercial papers rose sharply Tuesday, with the total quantum raised being INR 66.95 billion, up from Friday as issuances were nil then. The major issuer was Small Industries Development Bank of India, raising INR 14.00 billion via a three-month paper at 5.90%. The other big CP issuer was ICICI Securities, which borrowed INR 8.00 billion through a three-month paper at 6.68%.  

Rates on commercial papers for three months issued by manufacturing companies were 5.90–5.95%, unchanged from Friday. However, rates on papers of the same maturity from non-banking financial companies were 6.85–6.88%, up from 6.55–6.60% Friday. "Active participation from borrowers pushed the rates up," a dealer at a state-owned bank said.

--Primary market
* Axis Bank and Bank of Baroda raised funds through CDs.

* Small Industries Development Bank of India, Bharat Heavy Electricals Ltd, Network 18, Grasim Industries Limited, Tata Power Ltd, HDFC Securities, Kotak Securities, Godrej Industries, Tata Realty and Infrastructure, ICICI Securities, Axis Securities, Bajaj Finance Securities, Pilani Investments, Birla Group Holding, IGH Holding raised funds through CPs.    

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded four times at a weighted average yield of 5.3819%

* Hindustan Zinc's CP maturing Wednesday was traded four 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

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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