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Informist, Tuesday, Dec. 2, 2025

 

By Vaishali Tyagi

 

NEW DELHI – Borrowing through certificates of deposit and commercial papers remained tepid for the second day Tuesday as borrowers stayed on the sidelines due to low funding requirements amid ample liquidity in the banking system, dealers said. Fundraising through short-term debt instruments rose slightly on Tuesday, driven by banks and companies meeting rollover requirements ahead of upcoming maturities. However, overall activity remained on the lower side, they said.

 

A total of INR 38 billion was raised through CDs Tuesday, compared with none issued the previous day. Only two banks borrowed funds through CDs Tuesday. Union Bank of India was the largest CD issuer. The bank raised INR 24 billion through CD maturing in three months at 5.95%. Another state-owned bank, Bank of Baroda raised INR 14 billlion through a one-year maturity CD at 6.44%. 

 

Dealers attributed the low activity in short-term debt market to not having an immediate and significant requirement for funds as the system remained flush with liquidity. The central bank's net absorption from the banking system--a proxy for liquidity surplus--was INR 2.59 trillion Monday, higher than INR 1.45 trillion Sunday. Monday's liquidity surplus in the system was the highest since Sept. 14, when liquidity was INR 2.66 trillion. The last tranche of CRR cut added around INR 650 billion to the banking system.  

 

Dealers said that secondary market activity in CDs increased, with rates remaining largely unchanged on Tuesday. Indicative rates on three-month CDs were 5.95-6.02%, broadly unchanged from 5.96-6.02% on Monday. Rates on six-month and one-year CDs were steady at 6.20–6.23% and 6.40–6.45%, respectively. 

 

Dealers said companies only tapped the commercial paper market for immediate funding needs, which kept overall primary market activity low. A few corporates with maturity profiles met their requirements with small issuances but overall participation was limited.

 

Commercial papers worth INR 29.75 billion were issued Tuesday, from none issued Monday, according to dealers. L&T Finance was the largest issuer. It raised INR 15 billion through an intra-month maturity paper at 6.30%. Small Industries Development Bank of India borrowed INR 7.50 billion through a three-month CP at 6.00%. Other CP issuers included Godrej Industries and  Grasim Industries. 

 

Indicative rates on CPs remained unchanged from Monday as demand from issuers was easily met by investors. Rates on three-month papers issued by manufacturing companies remained unchanged Tuesday from Monday at 6.03-6.12%. Rates on papers of similar maturity issued by non-banking finance companies were 6.66-6.76%, also broadly unchanged from Monday. Most issuers stayed on sidelines as ahead of the RBI's Monetary Policy Committee meeting decision on Friday. The central bank will hold its bi-monthly policy meeting Wed-Thu.

 

--Primary market

* L&T Finance, Grasim Industries, Small Industries Development Bank of India, Godrej Industries raised funds through CPs

* Union Bank of India and Bank of Baroda raised funds through CDs

 

--Secondary market

* HDFC Bank's CD maturing on Wednesday was traded seven times at a weighted average yield of 5.3050%

* Bharti Airtel's CP maturing Wednesday was traded three timesat a weighted average yield of 5.3040%

 

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
Tuesday	Monday	Tuesday	Monday
84.40	75.75	73.45	23.90

 

End

 

Edited by Akul Nishant Akhoury

 

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