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Informist, Wednesday, Nov. 19, 2025

 

By Vaishali Tyagi

 

MUMBAI – Funds raised through certificates of deposit surged Wednesday as borrowing rates fell after the Reserve Bank of India set lower-than-expected cut-off yields at its weekly treasury-bill auction, leading banks to step up issuances of certificates of deposit. The RBI set the cut-off on the 91-day T-bill three basis points lower than market expectations. At the weekly T-bill auction Wednesday, the RBI set a cut-off yield of 5.38% on the 91-day T-bill, against an Informist poll estimate of 5.41%. 

 

Dealers said short-term funding rates also fell as liquidity in the banking system remained comfortable. Surplus funds with mutual funds, which are major investors in short-term debt papers, kept the market active, traders said. The central bank's net absorption from the banking system – a proxy for liquidity surplus – was INR 1.75 trillion Tuesday, down from INR 1.88 trillion Monday. 

 

"After the T-bill cut-off came down, the entire curve or short-term rates shifted slightly lower...and banks saw an opportunity to raise funds at cheaper levels, so CD supply picked up right after the auction," a dealer at a brokerage firm said. "The market was easily absorbing the extra supply. With both banks and investors reacting to the softer auction, yields on commercial papers also eased by 3–4 bps, tracking CDs." Several state-owned banks, along with the largest private sector bank, raised funds from the market Wednesday, issuing CDs in the 5.93–6.22?nd for three-month maturity. 

 

A total of INR 147 billion was raised through CDs Wednesday, compared to 65 billion raised through CDs Tuesday. HDFC Bank was the largest CD issuer Wednesday. The bank raised INR 104.50 billion through issuance of two CDs of different maturities. The private sector lender raised INR 93 billion through three-month CDs at 5.97%, and INR 11.50 billion at 6.45% through CDs maturing in one year. Indian Bank raised INR 12.50 billion through a three-month paper at 5.93%. Other CD issuers included Bank of India, Punjab & Sind Bank, and Union Bank, which raised INR 10.00 billion each.

 

Dealers said fundraising via CDs rose sharply as banks front-loaded to meet rollover requirements ahead of November maturities, taking advantage of lower rates and strong investor interest.

Indicative rates on CDs fell 3-4 basis points. Rates on three-month CDs were 5.96-6.02% compared with 6.00-6.08% Tuesday. Yields on six-month and one-year CDs also marginally fell to 6.20–6.23% and 6.38–6.45%, respectively.

 

In contrast, commercial paper issuances fell Wednesday to INR 40.00 billion, from 139.00 billion on Tuesday. Most CPs were issued in the three-month maturity segment. Cholamandalam Finance, Jio Credit Finance, and SBI Capital Securities, were among the major issuances. Cholamandalam Finance borrowed INR 8.00 billion through an eight-day paper at 6.50%. Jio Credit Finance borrowed INR 5.00 billion by issuing a three-month paper at 6.50%. SBI Capital Securities raised INR 4.00 billion through paper maturing in three months at 6.65%. Other issuers included ICICI Securities, Kotak Mahindra Prime Loans, Axis Securities, CESC, and Godrej Finance,

 

Dealers said most of the non-banking financial companies tapped the market to roll over upcoming maturities, dealers said. Rates on three-month papers issued by manufacturing companies marginally declined to 6.00-6.10%. Rates on papers of similar maturity issued by non-banking finance companies were at 6.60-6.70%, down from 6.63-6.73% Tuesday.

 

--Primary market

* Cholamandalam Finance, Jio Credit Finance, Kotak Securities, SBI Capital Securities, ICICI Securities, Kotak Mahindra Prime Loans, Axis Securities, CESC, Godrej Finance, IGH Holding, Pilani Investment raised funds through CPs

* HDFC Bank, Indian Bank, Bank of India, Punjab & Sind Bank, Union Bank of India raised funds through CDs

 

--Secondary market

* IDFC First Bank's CD maturing on Thursday was traded once at a weighted average yield of 5.2933%

* ONGC Petro Additions's CP maturing Thursday was traded once at a weighted average yield of 5.3663%

 

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
79.30	71.65	73.50	46.50

 

 

End

 

Edited by Deepshikha Bhardwaj

 

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