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Informist, Wednesday, Oct. 8, 2025

By Vaishali Tyagi

MUMBAI – Rates in the short-term debt market remained unchanged due to low issuances by corporates and banks, amid muted participation from mutual funds, major investors in the short-term debt market, dealers said. "There is sluggish activity in the short-term debt market due to low investor participation, particularly from mutual funds, which typically account for 80-90% of activity in instruments like CP, CDs," a dealer at a brokerage said. 

Rates on the certificates of deposit market remained unchanged Thursday as the majority of banks remained on the sidelines, avoiding borrowing from the market amid ample liquidity in the system. As per the latest RBI data, the liquidity absorbed by the central bank, a proxy for systemic liquidity surplus, was INR 1.29 trillion on Wednesday, down from INR 1.48 trillion Tuesday. There were no CD issuances on Thursday. 

"While some banks were willing to issue bonds, deals did not happen as investor banks sought higher rates, given the attractive returns available in the interbank call money market or through the triparty repo rate after the overnight VRRR (variable rate reverse repo auction)," the dealer quoted above said. "Mutual fund participation was also low today (Thursday). Earlier in the day, the Reserve Bank of India conducted overnight VRRR and accepted all bids worth INR 468.60 billion. 

Indicative rates for three-month CDs remained unchanged at 5.85-5.90% from Wednesday. 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 as market participants engaged only in need-based issuances to roll over their upcoming maturities, dealers said. Kotak Securities was the biggest issuer in the CP market, raising INR 2.50 billion through a four-month paper at 6.66%. Bajaj Finance Securities raised INR 1.0 billion at 6.49% through CP maturing at the end of December.

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

* Kotak Securities and Bajaj Finance Securities raised funds through CPs.

--Secondary market

* HDFC Bank's CD maturing Friday was traded once at a weighted average yield of 5.4028%.

* ICICI Securities' CP maturing Friday was traded twice at a weighted average yield of 5.7679%.

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: 

Edited by Saji George Titus

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