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Informist, Tuesday, Sept. 23, 2025

 

By Shravani Chandiwade

 

MUMBAI – Funds raised through certificates of deposit on Tuesday fell slightly from the previous day, with only two banks tapping the market. Overall commercial paper issuance rose Tuesday but overall, it remained subdued with companies raising minimal funds, dealers said.

 

Issuances in the CD market aggregated to INR 45.00 billion, lower than INR 49.50 billion Monday. Bank of India was the large issuer in the CD market. The bank raised INR 30.00 billion via a three-month paper at 5.85%.

 

HDFC Bank was the only other issuer, raising INR 15.00 billion through a three-month paper at 5.83%. India's largest private sector bank has already met its rollover requirements for this month earlier, but has cumulatively raised INR 40 billion through three-month papers in the last two days.

 

Dealers do not expect the issuances to rise further later this week as most banks have already rolled over their upcoming maturities. Now, most banks will look to sit tight ahead of the September quarter-end, dealers said. This was despite banking system liquidity falling into deficit for the first time in 2025-26 (Apr-Mar). 

 

As per latest data from the Reserve Bank of India, it infused INR 319.87 billion into the banking system Monday, largely due to payments for goods and services tax. An infusion represents a deficit, while absorption by the RBI represents a surplus. 

 

"Definitive figures regarding GST payouts are still not clear, but seeing the impact (on liquidity) it is mostly more than what the market had expected," a dealer at a state-owned bank said. Traders had initially pegged GST outflows to drain around INR 1.8 trillion from the banking system between Saturday and Monday.

 

Due to the limited participation from banks, the borrowing cost on CD papers remained unchanged from Monday. Rates on three-month tenure CD papers were 5.80–5.85%, rates on six-month CD paper were 6.10-6.15%, and those on the one-year paper stood at 6.35–6.40%.

 

Tuesday, activity in the commercial paper market did pick up compared to Monday, when HDFC Securities was the sole issuer. However, issues were not of big quantum as majority of the issuers had already raised a fair share of funds in the previous week ahead of their maturities.

 

The total volume raised in the CP market on Tuesday stood at INR 22.25 billion as one manufacturing and three non-banking financial companies tapped the market. Issuers preferred raising money through three-month papers, as demand from mutual funds for such maturities remained high for their liquid schemes, dealers said.

 

"These MFs (mutual funds) typically prefer short-term investment options, and were therefore seen actively investing in CPs of three-month tenure on Tuesday," a dealer at a another state-owned bank said.

 

Tuesday, rates on papers of the three-month tenure issued by manufacturing companies were 5.85–5.90% and those of the same tenure issued by non-banking financial companies were 6.70–6.75%.

 

--Primary market

* Kotak Securities, SBI Capital Securities, Jio Credit Ltd. and Indian Oil Corp. Ltd. raised funds through CPs.

* HDFC Bank and Bank of India raised funds through CDs.

  

--Secondary market

* HDFC Bank's CD maturing Friday was traded twice at a weighted average yield of 5.6480%.

* National Bank for Agriculture and Rural Development's CP maturing Wednesday was traded six times at a weighted average yield       of 5.6018%.

 

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
Tuesday	Monday	Tuesday	Monday
37.90	63.90	40.15	72.75

 

End

 

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

 

Edited by Avishek Dutta

 

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