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Informist, Tuesday, Jan. 6, 2026

 

By J. Navya Sruthi

 

MUMBAI – Fundraising through issuance of certificates of deposit and commercial papers improved Tuesday on the back of higher systemic liquidity, dealers said. Going forward, they expect issuance of CPs and CDs to increase further as liquidity surplus increases, they said.   

 

Bank of Baroda raised INR 30 billion through one-year CDs at 6.78% and L&T Finance raised INR 18.50 billion through intra-month CPs, maturing this month, at 6.21%. Other than these two major issuances, Kotak Securities, Godrej Properties, Indian Bank, and Bank of Maharashtra also raised funds in the primary market Tuesday.    

 

"We have OMO (open market operations auction) inflows today (Tuesday) and also liquidity improved slightly," a dealer at a state-owned company said. Another dealer at a private sector bank said banks and mutual funds were seen on the buying side in the primary market, while mutual funds were also on the selling side in the secondary market.  

 

"While mutual funds are selling longer-end bonds and shifting to CPs (and) CDs, the effect on the rates in short-term debt market is yet to be seen. On the other hand, there is demand-supply mismatch too which is keeping rates (of one-year CDs) higher," a fund manager at a domestic mutual fund house said.

 

Additionally, volumes in the secondary market also increased Tuesday compared to the previous week. The secondary market volume in the CD market was INR 97.65 billion Tuesday, down from INR 110.75 billion Monday, but significantly higher than INR 47.40 billion Friday. Similarly, volume in the CP market was INR 25.95 billion, up from INR 20.95 billion Monday and INR 12.50 billion Friday.  

 

The three-month CD was largely steady from the previous day at 5.90-5.95% Tuesday and rates on the six-month CD were also largely similar to the previous day at 6.35-6.40%. However, rates on one-year CDs were at 6.75-6.78% Tuesday, up from 6.65-6.70% Monday. Rates on three-month CPs issued by manufacturing and non-banking finance companies were also largely unchanged from the previous day at 6.05-6.07% and 6.46%, respectively.   

 

The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 648.12 billion Monday, higher than INR 497.02 billion Sunday. The market expects liquidity surplus to rise Tuesday as the Reserve Bank of India has infused INR 500 billion durable liquidity into the banking system Tuesday through open market operation auction, conducted on Monday. The central bank will infuse INR 1 trillion through two other OMO auctions, due this month, along with a $10 billion dollar-rupee buy-sell swap, due on Jan. 13. These measures by the central bank will support the systemic liquidity and lead to higher issuances in the primary market and also weigh on yields.  

 

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
97.65	110.75	25.95	20.95

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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