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Informist, Friday, Sept. 19, 2025

 

MUMBAI – Banks tapped the certificates of deposit market Friday ahead of the weekend and goods and services tax outflows, dealers said. The overall commercial paper issuances rose from Thursday but remained subdued as manufacturing and non-banking financial companies have already met most of their needs to roll over maturing securities, they said. 

 

CD issuances aggregated to INR 35.50 billion on Friday, down from INR 53.50 billion Thursday. There were only two large issues in the CD market, raised by IDBI Bank and Union Bank of India. The former raised INR 15.00 billion through a three-month CD paper at 5.88% rate while the latter raised INR 12.00 billion via the same tenure paper but at 5.78%.

 

The remaining banks raised minimal funds as most of them have rolled over their upcoming maturities, dealers said. Punjab and Sind Bank added quantum to its earlier CD worth INR 8 billion. On Friday, the bank raised INR 2.50 billion via a three-month paper at 5.88%.

 

The overall activity in the CD market stayed moderate given the active borrowing earlier this week. GST outflows are likely to commence on Saturday and are expected to drain liquidity of around INR 1.8 trillion to INR 2 trillion from the banking system, dealers said.

 

Banking system liquidity is lower than last week, but banks are being calculative about their borrowing near the quarter-end, dealers said. As per the latest data from the Reserve Bank of India, it net absorbed INR 727.74 billion on Thursday. On Sept. 12, the liquidity surplus was INR 2.64 trillion. The RBI conducted two variable rate repo auctions to inject short-term liquidity into the market, but both were undersubscribed as banks resorted to the money markets for their cash needs, dealers said.

 

Funds raised via CPs were higher against those raised on Thursday, but overall the activity remained subdued. The total amount borrowed via CPs on Friday stood at INR 26.75 billion, up from INR 17.00 billion Thursday.

 

Bajaj Finance Securities was the sole large issuer among the participants, raising INR 10.00 billion through a three-month CP at 6.58%. Borrowing in the CP market is expected to remain subdued in the coming days, dealers said. In the secondary market, mutual funds were actively selling short-term papers and buying long-tenure papers, they said. 

 

--Primary market

* HDB Finance, Godrej Consumer Products, Godrej Industries, ICICI Securities, Birla Group Holding, Poonawala Fincorp raised funds through CPs.

* Union Bank of India, Punjab & Sind Bank, IDBI Bank, and HDFC Bank raised funds through CDs.

 

--Secondary market

* Union Bank of India's CD maturing Wednesday was traded once at a weighted average yield of 5.6953%.

* National Bank for Agriculture and Rural Development's CP maturing Wednesday was traded once at a weighted average yield of 5.6958%.

 

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:

 

Certificates of deposit		Commercial paper
Friday	Thursday	Friday	Thursday
79.80	145.85	88.50	116.65

 

End

 

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

 

Edited by Tanima Banerjee

 

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