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Informist, Monday, Dec. 15, 2025

 

By Vaishali Tyagi

 

MUMBAI – Fundraising via certificates of deposit and commercial papers slumped Monday due to requirement-based borrowing and muted participation by mutual funds, the most active participants in the market, dealers said.

 

"Capital was tight today (Monday), as outflows for advance tax payments were scheduled. Mutual funds had limited cash, so they were on the sidelines," a dealer at a brokerage firm said. Issuers and investors were unable to reach common ground, and many deals were not concluded because investors were not comfortable with the terms being offered by borrowers.

 

Total issuances of commercial papers declined to INR 5 billion Monday down from INR 13 billion on Friday. Godrej Consumer Products and Kotak Securities were the only borrowers, raising INR 2.5 billion each through three-month CPs at 6.11% and 6.65%, respectively. Rates on three-month paper issued by manufacturing companies remained unchanged at 6.00-6.20% Friday. Rates on similar maturity papers issued by non-banking finance companies were at 6.50-6.60%, broadly unchanged from the previous session. "I heard that more companies were looking to raise funds through CPs. We heard Godrej Industries was also there and was planning to raise funds at 6.11% but investors were not comfortable with that," the dealer quoted above said.

 

Although liquidity in the banking system was ample following the RBI's INR 500-billion open market operation auction, dealers expect outflows of about INR 1.50 trillion to INR 1.75 trillion for advance tax payments. Dealers expect rates to move towards the higher end of the liquidity adjustment facility corridor. The central bank's net absorption from the banking system – a proxy for the liquidity surplus – was INR 1.83 trillion on Sunday, down from INR 1.85 trillion Saturday and INR 2.14 trillion Friday. 

 

No bank raised funds through CDs on Monday. In comparison, banks had raised INR 25 billion on Friday. Indicative CD rates were steady with three-month CD rates in the range of 5.96-6.01%, compared with 5.95-6.00% Friday. Rates on six-month and one-year CDs were steady at 6.26-6.32% and 6.43–6.50%, respectively.

 

Dealers said low funds with investors led to a quiet day in the primary and secondary markets Monday. Secondary market CD volume was INR 97.60 billion, marginally up from INR 91.20 billion, while CP volume fell to INR 51.05 billion from INR 72.00 billion on Friday. Market participants expect primary market activity to pick up once issuers and investors agree on rates, as liquidity returns to the system.

 

--Primary market

* Godrej Consumer Products, Kotak Securities raised funds through CPs

* No bank raised funds through CDs

 

--Secondary market

* Axis Bank's CD maturing Tuesday was traded five times at a weighted average yield of 5.2568%

* Indian Oil Corp.'s CP maturing Tuesday was traded six times at a weighted average yield of 5.3062%

 

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
Monday	Friday	Monday	Friday
97.60	91.20	51.05	72.00

 

 

End

 

Edited by Saji George Titus

 

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