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Informist, Friday, Oct. 24, 2025

By Vaishali Tyagi

MUMBAI – Rates in the short-term debt market ended slightly higher Friday due to increased demand for funds amid tighter liquidity conditions, dealers said. Liquidity in the banking system remained in deficit on outflows for goods and services tax, they said. As per latest data, the Reserve Bank of India's net injection into the banking system – a proxy for systemic liquidity deficit – stood at INR 26.46 billion Thursday, significantly lower from INR 523.00 billion Wednesday.

"Today (Friday), rates were slightly higher throughout the day due to strong demand for funds amid a liquidity deficit, with many participants in the market," a dealer at a brokerage firm said. "With the weekend and month-end approaching, traders face tighter conditions and will need to meet rollover requirements."

Systemic liquidity has been in deficit this week due to GST payments, with some state-owned banks borrowing in money markets instead of lending. Liquidity is expected to improve next week as government spending kicks in at month-end, potentially returning to a comfortable surplus.

Borrowing through certificates of deposit fell significantly Friday due to slightly higher rates, dealers said. On Friday, INR 17.25 billion was raised through CDs, down from INR 56.25 billion Thursday. IndusInd Bank was the sole CD issuer Friday. It raised INR 17.50 billion through paper maturing at the end of March at 6.40%.

Due to the sharp rise in demand for funds, the indicative rates in the three-month CD market rose slightly from Thursday, dealers said. Indicative rates for three-month CDs were 5.90-6.00%, up from 5.86-5.97 on Thursday. Yields on papers maturing in six months and one year also moved slightly higher to 6.15–6.25% and 6.40–6.45%, respectively, dealers said.

In the case of commercial papers, issuances remained broadly steady from Thursday as non-banking financial companies tapped the market to meet their lending and rollover requirements for October, dealers said. On Friday, INR 18.25 billion was raised through commercial papers, marginally higher from INR 17.00 billion Thursday. HDFC Securities was the largest CP issuer, raising INR 9.25 billion through a three-month paper at 6.75%. Axis Securities borrowed INR 6.5 billion via three-month paper at 6.75%. Others issuers included Bajaj Financial Securities and Kotak Securities.

The indicative rates for CPs ended marginally higher. Rates on three-month CP issued by manufacturing companies were 5.98-6.07% on Friday, up from 5.95-6.05 Thursday. Rates on similar maturity papers issued by non-banking financial companies were at 6.67-6.77%, marginally higher than 6.65-6.75% on Thursday.

--Primary market

* HDFC Securities, Bajaj Financial Securities, Kotak Securities, Axis Securities raised funds through CPs

* IndusInd Bank raised funds through CD

--Secondary market

* Kotak Mahindra Bank's CD maturing on Monday was traded once at a weighted average yield of 5.4653%

* Indian Oil Corp. Ltd.'s CP maturing on Nov. 3 was traded once at a weighted average yield of 5.8494%

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

Edited by Ashish Shirke

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