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Informist, Friday, Nov. 21, 2025

 

By Vaishali Tyagi

 

MUMBAI – Activity in the primary short-term debt market remained subdued Friday. Only a handful of commercial paper and certificates of deposit were issued. Dealers said most banks and companies had met their rollover requirements, leaving only demand-driven deals. Hence, volumes in the secondary market also fell.

 

Companies tapped the CP market only to meet immediate funding needs, dealers said. Most had already rolled over maturing issues by borrowing aggressively earlier in the week and the previous week. Only INR 29.50 billion of CP were issued Friday. Export-Import Bank of India was the largest issuer. It raised INR 25 billion through a six-month CP at 6.22%. Kotak Securities borrowed INR 4.5 billion through a three-month CP at 6.61%.

 

"Though today's quantum is higher than yesterday (Thursday), overall activity is on the lower side," a dealer at a broking firm said. "Issuers were mostly meeting specific needs, with no aggressive activity."

 

Dealers said requirement for funds is likely to continue to remain low as liquidity in the banking system is expected to be comfortable despite month-end outflows for payment of goods and services tax. The net effect of GST payments will be around INR 500 billion to INR 600 billion. Dealers said even if there is liquidity squeeze, it will be temporary, as the Centre's month-end expenditure is expected next week, along with around INR 700 billion worth of inflows from the final tranche of the cash reserve ratio cut in the fortnight beginning Nov. 29. The central bank's net absorption from the banking system--a proxy for the liquidity surplus--was INR 1.57 trillion Thursday, marginally down from INR 1.72 trillion Wednesday.

 

Rates in the secondary CP market were steady as demand and supply were balanced. The indicative rates on CP remained unchanged Friday as demand from issuers was met easily by mutual funds, dealers said. Rates on three-month paper issued by manufacturing companies remained steady at 6.00-6.10%. Rates on paper of similar maturity issued by non-banking finance companies were at 6.58-6.65%, also broadly unchanged from Thursday.

 

The CD market became active only in the latter part of the day as issuers and investors were unable to come to terms on rates earlier, dealers said. Given the liquidity surplus in the banking system and low funding needs, major banks remained on the sidelines, keeping indicative CD rates unchanged, they said. Punjab National Bank raised INR 40 billion through two CD of different maturities. The state-owned lender raised INR 30 bln through a three-month CD at 5.95% and INR 10 billion through a one-month CD at 5.75%. Karur Vysya Bank raised INR 5 billion through a paper of one-year maturity at 6.75%.

 

Dealers said indicative rates on CD remained unchanged Friday. Indicative rates on three-month CDs were 5.96-6.02%, same as on Thursday. Rates on six-month and one-year CDs were also steady at 6.20–6.23% and 6.38–6.45%, respectively.

 

--Primary market

* Export-Import Bank of India and Kotak Securities raised funds through CP

* Punjab National Bank and Karur Vysya Bank raised funds through CD

 

--Secondary market

* Canara Bank's CD maturing Thursday was traded six times at a weighted average yield of 5.7176%

* Aditya Birla Capital's CP maturing Monday was traded thrice at a weighted average yield of 5.5018%

 

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
Friday	Thursday	Friday	Thursday
58.40	79.60	44.45	69.50

 

End

 

Edited by Rajeev Pai

 

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