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Informist, Monday, Sept. 22, 2025

By Shravani Chandiwade

MUMBAI – Issues in the certificates of deposit market remained firm as there was pressure on the liquidity surplus in the banking system with outflows for goods and services tax. As per latest data from the central bank, it net absorbed INR 70.72 billion Sunday, down from INR 89.55 billion Saturday. The current liquidity surplus is the lowest since Mar. 28. However, in the commercial paper market, manufacturing and non-banking financial companies stayed on the sidelines after rolling over their maturing papers last week.

Outflows for goods and services tax commenced on Saturday and these payouts were expected to drain out around INR 1.8 trillion from the banking system by Monday, dealers said. "After considering the current liquidity status, the GST outflows are seen draining more than INR 2 trillion from the banking system and are expected to drain further," a dealer at state-owned bank said.

In the CD market, HDFC Bank was the large issuer among participants. The bank has already met its rollover requirements. On Monday, it raised INR 25.00 billion through a three-month CD at 5.83%. The second significant issuer was Small Industries Development Bank of India, which raised INR 16.00 billion through a one-year CD at 6.40%. In total, four banks tapped the CD market and the issuances aggregated to INR 49.50 billion, up from INR 35.50 billion on Friday.  

Mutual funds, who are the largest investors in the CD market, were active on the lending front as they are sitting on ample cash, dealers said. "For the past few days, MFs have been actively lending funds but they are doing it cautiously due to the quarter-end period," said the dealer quoted earlier.

"Later this week, there will be a rise in CD issues as banks aim to manage their balance sheet before quarterly results," a dealer at another state-owned bank said. 

Indicative rates in the certificates of deposit market for three-month CDs on Monday were 5.80–5.85%, rates on the six-month CDs were 6.11–6.15% and those on one-year CDs stood at 6.35–6.40%. Rates for all tenures were similar to Friday.

On Monday, issuances on the commercial paper front were muted as majority of the companies stayed on the sidelines after tapping the market last week to meet their upcoming maturities, dealers said. Manufacturing and non-banking financial companies borrowed aggressively last week, cumulatively raising INR 247.25 billion. 

HDFC Securities was the sole CP issuer. The non-banking finance company raised INR 4.00 billion through a three-month paper CP at 6.55%. The company has total CPs worth of INR 56.75 billion maturing this month and so far, it has raised INR 52.75 billion by taking into account Monday's issuance.

Indicative rates for CPs issued by non-banking financial companies for a three-month tenure were 6.40–6.45% and rates for papers of the same tenure issued by manufacturing companies were 5.85–5.90%, dealers said.

--Primary market

* HDFC Securities raised funds through CPs.

* Punjab & Sind Bank, HDFC Bank, Indian Overseas Bank and Small Industries Development Bank of India raised funds through CDs.

--Secondary market

* Union Bank of India's CD maturing Tuesday was traded twice at a weighted average yield of 5.5488%.

* Reliance Industries Ltd.'s CP maturing Wednesday was traded seven at a weighted average yield of 5.5614%.

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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