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Informist, Thursday, Dec. 11, 2025

By Vaishali Tyagi

NEW DELHI – Issuances in the short-term debt market rose Thursday as banks and companies flocked to the market to roll over their maturing papers, dealers said. Borrowing rates in the market remained unchanged from the previous day due to comfortable liquidity in mutual funds, the major investors in the market, they said.

"Issuers with maturity requirements tapped the market and received a good response from investors, thanks to ample liquidity in the system," a dealer at a brokerage firm said. The central bank's net absorption from the banking system--a proxy for the liquidity surplus--was INR 1.66 trillion Wednesday, slightly lower than INR 1.85 trillion Tuesday. 

Six banks and financial institutions together raised INR 115 billion Thursday through certificates of deposit, significantly higher than INR 35 billion on Wednesday. State-owned Punjab National Bank was the largest issuer, raising INR 37 billion through a three-month paper at 6.04%. Small Industries Development Bank of India borrowed INR 30 billion through a one-year paper CD at 6.68%.

Canara Bank raised INR 12 billion through a one-month paper at 6.00%, while Indian Bank raised INR 15 billion through a three-month paper at 6.03%. Bank of India, UCO Bank, Bank of Baroda, and Karur Vysya Bank also tapped the short-term debt market.

Dealers said mutual funds were active on both the buying and selling fronts in both the primary and secondary markets. "MFs were quite active today (Thursday), investing in the primary market and churning their portfolio in the secondary market," a dealer at a brokerage firm said "In fact, some banks were also seen trading some papers... I think traders who had cash were actively present (in the market) as they felt rates have stabilised, purchased and sold papers accordingly."

Dealers said that although issuances rose, indicative CD rates were steady because mutual funds met demand. Indicative rates on three-month CDs were in the range of 5.96-6.01%, compared with 5.95-6.00% Wednesday. Rates on six-month and one-year CDs were steady at 6.26-6.32% and 6.43–6.50%, respectively.

Issuances of commercial papers rose to INR 65.25 billion on Thursday from INR 40 billion on Wednesday. ICICI Securities was the largest CP issuer, raising INR 20 billion through a three-month paper at 6.62%. The other major CP issuer was Aditya Birla Capital, which raised INR 12.5 billion through two CPs. Kotak Securities raised INR 6 billion via three-month paper at 6.63%. Other key CP issuers were Small Industries Development Bank of India, Godrej Industries, Poonawala Finance, Axis Securities, and L&T Finance. 

Dealers said the secondary market for commercial paper saw strong trading activity, with volumes picking up on Thursday, as mutual funds actively traded papers with three-month maturities. Rates on three-month paper issued by manufacturing companies remained unchanged at 6.00-6.20% Thursday. Rates on paper of similar maturity issued by non-banking finance companies were at 6.52-6.62%, broadly unchanged from the previous session.

--Primary market

* Small Industries Development Bank of India, Godrej Industries, Aditya Birla Capital, Poonawala Finance, Axis Securities, ICICI Securities, Kotak Securities, SBI Capital Securities, and L&T Finance raised funds through CPs

* Canara Bank, UCO Bank, Indian Bank, Punjab National Bank, Bank of India, Karur Vysya Bank, Bank of Baroda, and SIDBI raised funds through CDs

--Secondary market

* Punjab National Bank's CD maturing Friday was traded seven times at a weighted average yield of 5.1837%

* ICICI Securities CP maturing Friday was traded thrice at a weighted average yield of 5.2017%

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 Saji George Titus

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