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Informist, Wednesday, Sept. 17, 2025

By Kabir Sharma

MUMBAI – Issuance of certificates of deposit remained firm on Wednesday as banks were looking to shore up funds before goods and services tax outflows began Saturday, dealers said. "Given the GST outflows, which are likely to start from Saturday and the current position of the liquidity surplus in the banking system, banks will more aggressively tap the market before this week ends," a dealer at another state-owned bank said.

Four banks raised funds through CDs Wednesday as the majority of the banks had already met their upcoming maturities, dealers said. Banks are seen raising funds either to meet their roll-over requirements or to fund fresh loans, dealers said. Axis Bank was the largest issuer, raising INR 20.00 billion through three-month paper at 5.78%. IDFC First Bank and Indian Bank raised INR 10.00 billion each through three-month papers at 5.82% and 5.83%, respectively.

GST outflows are expected to drain around INR 1.8 trillion from the banking system, dealers said. Rates are likely to rise after the outflows and as we move towards the quarter-end flows, which will keep the pressure on the system liquidity, they said. As per the latest data from the Reserve Bank of India, the net liquidity absorbed by the central bank – a proxy for the systemic liquidity surplus – stood at INR 705.79 billion on Tuesday, the lowest since Apr. 22. It was sharply lower than INR 1.90 trillion Monday.

The indicative rates for CDs of both longer and shorter tenures were unchanged from Tuesday, dealers said. Rates on three-month CDs were 5.80–5.85%, rates on six-month CDs were 6.15–6.20% and those on one-year papers were 6.35–6.40%, they said.

The total amount raised through commercial papers Wednesday was INR 48.00 billion, lower than INR 72.75 billion on Tuesday. National Bank for Agriculture and Rural Development was the largest issuer in the CP market, raising INR 30.00 billion via a three-month paper at 5.81%. The other big issuer was L&T Finance, which raised INR 12.00 billion through a three-month paper at 6.51%.

--Primary market

* HDFC Securities, Axis Securities, NABARD, L&T Finance, and ONGC Petro raised funds through CPs.

* Axis Bank, IDFC First Bank, NABARD and Indian Bank raised funds through CDs.

--Secondary market

* Canara Bank's CD maturing Thursday was traded nine times at a weighted average yield of 5.4812%.

* Bajaj Financial Securities' CP maturing Thursday was traded five 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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