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Informist, Wednesday, Oct. 8, 2025

 

By Vaishali Tyagi

 

MUMBAI – Borrowing activity via certificates of deposit and commercial papers was muted on Wednesday as a lack of any major funding needs kept borrowers on the sidelines. Some mutual funds, which are major investors in the short-term debt papers, were active on both buying and selling fronts in the secondary market, dealers said. 

"Activity in the primary market remained very dull today (Wednesday). We did not see any major deals being finalised," a dealer at a brokerage firm said. "Some banks were seen, but I think deals were not concluded... therefore we do not see any major CD issuances as well."

 

The majority of banks remained on the sidelines, avoiding borrowing from the market due to ample liquidity surplus in the banking system and low funding requirements, which resulted in unchanged indicative CD rates, dealers said.

On Tuesday, the RBI absorbed INR 1.48 trillion worth of liquidity from the banking system, a proxy for systemic liquidity surplus. Banks were also holding more cash than required with the central bank after the cash reserve ratio cut came into effect Saturday, which freed up around INR 700 billion of durable liquidity into the banking system. This will be reflected in the liquidity surplus over the week as banks will likely begin to reduce the reserves that provide no yield, dealers said. 

 

Indicative rates for three-month CDs remained unchanged at 5.85-5.90% from Tuesday. Yields on papers with six-month and one-year maturities also remained at the same levels at 6.10–6.15% and 6.35–6.45%, respectively, dealers said.

 

The primary market activity in CPs also remained dull, with some non-banking financial companies approaching the market but failing to finalise deals, resulting in steady rates, dealers said. Indicative rates for three-month papers issued by non-banking financial companies were 6.65-6.70%, and for similar-maturity papers issued by manufacturing companies, they were 5.95-6.00%. "Primary market was relatively dull from the CP side also... we did not see any major deal on this side," the dealer quoted above said.

 

Contrary to the muted primary issuances, in the secondary market, mutual funds were actively buying and selling papers according to their requirements, dealers said.

 

--Secondary market

* Small Industries Development Bank of India's CD maturing Thursday was traded four times at a weighted average yield of 5.3132%.

* Tata Projects' CP maturing Thursday was traded once at a weighted average yield of 5.3663%.

 

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
Wednesday	Tuesday	Wednesday	Tuesday
35.50	83.15	26.80	45.75

 

End

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

 

Edited by Saji George Titus

 

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