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Informist, Thursday, Dec. 18, 2025

 

By Vaishali Tyagi

 

NEW DELHI – Fundraising through short-term debt instruments was tepid Thursday, with issuers fulfilling only rollover-based requirement, dealers said. Other borrowers stayed on the sidelines as some key issuers had met rollover needs last week as well as earlier this week, they said.

 

Dealers said activity in the short-term debt market is driven by requirements such as maturities or to meet other portfolio needs. Issuers are getting higher rates, and mutual funds are not showing interest due to cash crunch and redemption pressure, so no one is comfortable with rates they are getting, they said. "Nothing significant happened today (Thursday), neither in primary nor in secondary market, as mutual funds, the most active players, are struggling with redemption pressure approaching quarter and month-end, and there's already a cash crunch," a dealer at a brokerage firm said. The RBI's net injection into the banking system – a proxy for the liquidity deficit – was INR 685.86 billion Wednesday, the highest since Oct. 20. The RBI's net injection was INR 607.88 billion Tuesday.

 

As far as certificates of deposit are concerned, most banks stayed on the sidelines as they had already met their roll-over requirements. Only three banks raised funds through CDs worth INR 55 billion on Thursday, which was significantly lower than INR 111.50 billion on Wednesday. State-owned Canara Bank was the largest issuer, raising INR 30 billion through a three-month paper at 6.04%. Punjab National Bank borrowed INR 15 billion through three-month CD at 6.04%. Federal Bank issued three-month CD to borrow INR 10 billion at 6.18%. 

 

Dealers said activity in the secondary market of CDs declined compared to the previous session due to liquidity crunch. They said secondary market activity in CDs fell marginally Thursday, with rates remaining unchanged from Tuesday. Indicative rates on three-month CDs were 5.99-6.04%. Rates on six-month and one-year CDs were 6.29-6.36% and 6.47–6.58%, respectively.

 

Fundraising through commercial papers rose to INR 67.5 billion against INR 41.00 billion Wednesday. Small Industries Development Bank of India was the largest CP issuer, raising INR 50 billion through a three-month paper at 6.14%. Other CP issuers did not raise any significant amount. Kotak Securities borrowed INR 6.00 billion by issuing two three-month CPs. Other issuers were Cholamandalam Investment and Finance, Tata Capital, and Bajaj Finance. All papers issued had a three-month maturity each.

 

Dealers said many non-banking finance companies tapped the market to meet their rollover requirements. Indicative rates on CPs remained unchanged as the demand from issuers was met easily by investors. Rates on three-month paper issued by manufacturing companies were at 6.02-6.21%. Rates on paper of similar maturity by non-bank lenders were at 6.50-6.60%. 

 

--Primary market

* Kotak Securities, Cholamandalam Investment and Finance, Tata Capital, Bajaj Finance, Small Industries Development Bank of India raised funds through CP
* Federal Bank, Canara Bank, Punjab National Bank raised funds through CD

 

--Secondary market

* Punjab National Bank's CD maturing Friday was traded 11 times at a weighted average yield of 5.3464%

* Indian Oil Corp.'s CP maturing Friday was traded 12 times at a weighted average yield of 5.3136%

 

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
Thursday	Wednesday	Thursday	Wednesday
107.50	149.50	99.85	24.90

 

 

End

 

Edited by Tanima Banerjee

 

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