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Informist, Thursday, Sept. 25, 2025

 

By Shravani Chandiwade

 

MUMBAI – Issuances in the short-term debt market were muted Thursday as banks and companies had already rolled over most of their maturing paper, dealers said. Mutual funds were also not active on the lending front owing to month- and quarter-end redemption pressure in liquid funds, they said.

 

On the certificates-of-deposit front, only Bank of Baroda tapped the market. It has been an active borrower over the past week, raising INR 64.00 billion since Sept. 15. Thursday, the bank borrowed an additional INR 6.00 billion via three-month paper at 5.85%.

 

Month-end inflows from the government's salary and pension payouts are expected to begin Friday. As a result, banks did not borrow aggressively in the CD market despite the prevailing liquidity deficit in the system. There are no significant outflows lined up until the end of the month, which also held banks back from borrowing, dealers said. As per the Reserve Bank of India's latest data, the central bank's net infusion into the banking system--a proxy for systemic liquidity deficit--stood at INR 263.19 billion Wednesday, sharply lower than INR 871.83 billion Tuesday.

 

CD rates remained unchanged from Wednesday. Rates on three-month CD were 5.80–5.85%, rates on six-month CD were 6.10–6.15%, and those on one-year paper were 6.35-6.40%, dealers said.

 

Only a few borrowers tapped the market for commercial paper to meet their funding needs, with substantial rolling over of maturing paper already completed earlier in September, dealers said. Thursday, HDFC Securities was the largest issuer of commercial paper. The non-banking finance company raised INR 5.00 billion through three-month paper at 6.75%. Bajaj Financial Securities raised INR 500.00 million via three-month paper at 6.67%. Issues in the CP market added up to INR 9.75 billion, down from INR 13.00 billion Wednesday.

 

Mutual funds, major investors in the short-term debt market, are under redemption pressure with the month-end approaching. Hence, they were not active on the lending front, dealers said. "There were many deals that were not concluded as mutual funds were charging very high rates for both CP and CD due to the redemption pressure," a dealer at a broking firm said.

 

--Primary market

* Kotak Securities, HDFC Securities, SBI Capital Securities, and Bajaj Financial Securities raised funds through CP.

* Bank of Baroda raised funds through CD.

  

--Secondary market

* HDFC Bank's CD maturing Friday was traded twice at a weighted average yield of 5.6292%.

* Reliance Industries Ltd.'s CP maturing Friday was traded twice at a weighted average yield of 5.6767%.

 

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
Thursday	Wednesday	Thursday	Wednesday
42.50	36.95	37.30	78.05

 

End

 

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

 

Edited by Rajeev Pai

 

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