More Stories

Informist, Tuesday, Dec. 30, 2025

 

By Vaishali Tyagi

 

MUMBAI – Issuances of certificates of deposit surged Tuesday, driven by big-ticket issuances, as banks rushed to the short-term debt market to roll over their maturing papers, dealers said. Primary borrowing through CDs rose to INR 83 billion Tuesday from 46.50 billion reported Monday.

 

Union Bank was the largest CD issuer. The bank raised a total of INR 65.50 billion through three CDs with different maturities. The public-sector bank raised INR 33.75 billion through the issuance of CD maturing in three months at 6.15%, while it raised INR 14.75 billion via CD maturing in six months at 6.50%. The state-owned lender raised the remaining amount of INR 17 billion through CD with one-year maturity at 6.72%. Another state-owned lender, Punjab National Bank, borrowed INR 6 billion at 6.05% through issuance of three-month CDs, and it also tapped the market to raise another INR 5.00 billion and INR 2 billion each through two more CDs. 

 

"Banks need capital amid liquidity crunch and rollover requirements," a dealer at a brokerage firm said. "Some banks are raising funds to lend to corporates. CP issuances have fallen and rates are up, so corporates are finding bank lines cheaper. Banks are issuing more CDs to play on arbitrage." The RBI's net liquidity injected into the banking system – a proxy for the liquidity deficit – was INR 715.84 billion Monday, higher than INR 623.02 billion Sunday.

 

Dealers said the liquidity crunch is hitting banks as issuers lack funds to finance demand for credit, and mutual funds as investors are facing redemption pressure. Issuances should pick up when liquidity returns to surplus and rates cool down, which is likely to happen in January. Indicative rates on three-month CDs were at 6.05-6.12% Tuesday, higher than 6.03-6.07% Monday. Rates on six-month and one-year CDs were 6.40-6.50% and 6.60–6.70%, respectively. 

 

There was no fundraising through commercial papers in the primary market Tuesday, compared to INR 26 billion raised Monday. A few corporates entered the market to raise funds but deals were not concluded, dealers said. Overall, there was less activity in the CPs market, they said. Borrowing costs on the three-month CPs issued by non-banking financial companies were at 6.45-6.60% Tuesday, unchanged from Monday, while indicative rates on three-month paper issued by manufacturing companies were at 6.05-6.15% Tuesday. 

 

Volume in the secondary market for CDs was higher than the previous day, but rates remained unchanged as demand was met adequately by sellers. The volume of CD transactions fell to INR 57.65 billion compared to Monday's volume of INR 40.25 billion. Meanwhile, activity in secondary market for CP remained subdued. The volume of CP transactions was INR 9.20 billion compared to Monday's volume of INR 8.15 billion.

 

--Primary market

* No funds raised through CPs

* Union Bank, Punjab National Bank raised funds through CDs

 

--Secondary market

* Bank of Baroda's CD maturing Friday was traded once at a weighted average yield of 6.0742%

* Godrej Agrovet's CP maturing Wednesday was traded once at a weighted average yield of 5.6584%

 

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
57.65	40.25	9.20	8.15

 

End

 

Edited by Tanima Banerjee

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.