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Informist, Monday, Sept. 15, 2025

By Shravani Chandiwade

MUMBAI – Primary issuances in the certificates of deposit market surged Monday as banks borrowed for their quarter-end requirements. Issuances of commercial papers also rose as manufacturing and non-banking financial companies tapped the market to roll over their upcoming maturities, dealers said.

CD issuances surged to INR 90.00 billion Monday from INR 20.00 billion Friday. Banks tapped the market as rates on shorter tenure papers came down by 2-3 basis points, even as those on longer tenures remained elevated for the fourth consecutive day, dealers said.

Bank of India was the largest issuer. The bank raised INR 30.00 billion through three-month paper at 5.85%. The other large issuers were Punjab National Bank and HDFC Bank. The former raised INR 20.00 billion through a three-month paper at 5.81%. HDFC Bank raised the same amount, but through a nine-month paper at 6.40%.

"Usually, issuances rise way above this during the quarter-end phase. However, ample liquidity surplus post the first tranche of CRR (cash reserve ratio) cut kept majority of the banks away from the CD market," a dealer at a state-owned bank said.

According to latest data from the Reserve Bank of India, net liquidity absorbed by the central bank from the banking system on Sunday was INR 2.66 trillion, slightly higher than INR 2.63 trillion Saturday. This was helped by the RBI relaxing norms on minimum cash requirements for banks starting from the Sept. 6 fortnight, which effectively freed up nearly INR 600 billion for banks to deploy. The RBI's 100-basis point cash reserve ratio cut will add additional durable liquidity to the banking system every four weeks.

Traders expect the issuances to rise further by the end of the week as the quarter-end nears and ahead of the goods and services tax outflows, which are likely to drain INR 1.5 trillion to INR 2.0 trillion from the banking system. In the secondary market, mutual funds were actively selling and buying CDs, dealers said.

The indicative rates for CD of longer tenure remained largely unchanged from Friday, dealers said. Rates on the three-month CDs were 5.80–5.85%, down 5.85–5.90% Friday. Rates on the six-month CD were 6.15–6.20% and those on one-year paper were 6.35–6.40%, they said.

The total amount raised from the commercial paper market Monday was INR 82.75 billion, up from INR 19.00 billion on Friday. HDFC Securities, Bajaj Finance Securities, and Kotak Securities raised INR 15.00 billion each for the same tenure of three months and same rate of 6.72%. The other large issuer was ICICI Securities, which raised INR 13.50 billion through a three-month paper at 6.69%.

On Monday, the indicative rates for commercial paper issued by non-banking financial companies for a three-month tenure were 6.70–6.75% and rates for manufacturing companies issuing the same tenure paper stood at 5.95–5.98%, dealers said.

The turnover of CDs in the secondary market Monday was INR 114.60 billion, down from INR 150.80 billion Friday. The total trades in commercial paper in the secondary market were INR 53.40 billion, down from INR 68.75 billion on Friday.

--Primary market

* ICICI Securities, Kotak Securities, Bajaj Finance Securities, Godrej Consumers, Axis Securities, UltraTech Cement, Tata Capital, Hongkong and Shanghai Banking Corp. Invest Direct, HDFC Securities raised funds through CPs.

* HDFC Bank, Indian Bank, Punjab National Bank, Indian Bank, Bank of India, and Karur Vysya Bank raised funds through CDs.

--Secondary market

* Union Bank of India's CD maturing Tuesday was traded two times at a weighted average yield of 5.5071%.

* National Bank for Agriculture and Rural Development's CP maturing Tuesday was traded two 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 Ashish Shirke

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