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Informist, Friday, Sept. 26, 2025

By Shravani Chandiwade

MUMBAI – Fundraising through certificates of deposit and commercial paper remained subdued Friday, barring one big-ticket issuance. Some potential issuers could not raise funds as mutual funds, which were facing quarter-end redemption pressures, demanded higher rates, dealers said.

"Issues in both markets (CP and CD) were dull today (Friday)," a dealer at a state-owned bank said.

Most banks, manufacturing companies, and non-bank finance companies have all rolled over their maturing papers for September. Power Finance Corp. was the biggest issuer in the CP market Friday, raising INR 30 billion through a seven-month paper at 6.40%. Birla Group Holding was the only other issuer, raising INR 3 billion through a three-month CP at 7.00%. Companies had borrowed INR 9.75 billion through CPs on Thursday. 

The same was the case in the CD market, with just two issuers Friday. Bank of Baroda raised funds for the third consecutive day Friday, extending its fundraising streak – the bank has raised INR 70 billion since Sept. 15. Though the bank has already met its rollover requirements, it raised INR 6 billion through a three-month paper at 5.90% Friday. 

Canara Bank was the other borrower in the CD market, raising INR 5 billion through a five-month CD at 6.15%. Funds raised in the CD market totalled INR 11 billion, up from INR 6 billion Thursday, when Bank of Baroda was the only issuer.

As per the latest data from the Reserve Bank of India, the central bank absorbed INR 129.82 billion Thursday, against a net infusion of INR 263.18 billion Wednesday. Systemic liquidity is expected to improve further in the coming days on month-end government spending, dealers said. The ramping up of lending at the quarter-end may keep banks on the lookout for funds. 

Mutual funds, which are major investors in both CDs and CPs, are facing month-end redemption pressure, and their participation was limited, dealers said. Dealers said some banks and companies, which were looking to raise funds, struggled to close deals due to a mismatch in rate expectations as mutual funds were demanding high rates.

"In the secondary market, mutual funds were selling short-tenure papers in order for funds," a dealer at another state-owned bank said.

Yields on three-month CDs rose by 5 to 7 basis points Friday to 5.85-5.90% Friday. However, yields on the six-month and one-year maturity papers remained unchanged from Thursday. Yields on six-month tenure CDs were 6.10–6.15%, and those on one-year paper were 6.35–6.40%, dealers said.

Meanwhile, rates in the CP market issued by non-banking financial companies inched higher Friday to 6.95–7.00%, dealers said. However, yields on similar-term papers issued by manufacturing companies remained unchanged at 5.85–5.90% from Thursday.  

--Primary market

* Birla Group Holding and Power Finance Corporation raised funds through CPs.

* Bank of Baroda and Canara Bank raised funds through CDs.

--Secondary market

* Punjab National Bank's CD maturing Monday was traded thrice at a weighted average yield of 5.5992%.

* L&T Finance's CP maturing Monday was traded once at a weighted average yield of 5.6480%.

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 Saji George Titus

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