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Informist, Monday, Jan. 12, 2026

 

By Vaishali Tyagi

 

NEW DELHI – High borrowing rates kept most issuers on the sidelines in the short-term debt market on Monday, dealers said. Mutual funds refrained from actively investing in the debt instruments due to low liquidity in the banking system, which kept the borrowing rates high, they said.

 

The net liquidity absorbed from the banking system by the Reserve Bank of India--a proxy for the liquidity surplus--was INR 298.72 billion on Sunday, against INR 274.71 billion on Saturday. Liquidity remained tight in the banking system due to settlement of the central bank's operations in the foreign exchange market to limit the fall of the rupee against the dollar, dealers said. 

 

Borrowing costs on three-month certificates of deposit remained elevated at 6.56-6.61% on Monday, but broadly unchanged from Friday. Rates on six-month CD were 6.72-6.75%, and on one-year CD at 6.85-6.94%, broadly unchanged from Friday. No CDs were issued in the primary market on Monday as against INR 70 billion worth of papers issued on Friday, dealers said. 

 

Issuers in need of immediate funds came to raise money even at higher rates. However, liquidity is tight right now and everyone is holding out for better rates, which is why many deals were not successful, dealers said. "Like last week, some issuers struggled to raise funds today also due to liquidity crunch," a dealer at a brokerage firm said.

In the commercial paper market, companies raised INR 13 billion on Monday compared to INR 2 billion of CPs issued on Friday. Aditya Birla Housing Finance raised INR 6 billion though CP maturing in five months at 6.98% and HDFC Securities borrowed INR 3 billion through an intra-month maturity CP at 6.30%. Bajaj Finance and Kotak Securities were the other two CP issuers.

 

Rates on three-month papers issued by non-banking financial companies were 6.70-6.75%, while rates on three-month CPs by non-banking finance companies were 6.10-6.15%.

 

--Primary market

* Aditya Birla Housing Finance, HDFC Securities, Bajaj Finance, and Kotak Securities raised funds through CPs

* No funds were raised through CDs

 

--Secondary market

* Punjab National Bank's CD maturing on Tuesday was traded four times at a weighted average yield of 5.1837%

* Panatone Finvest's CP maturing Tuesday was traded five times at a weighted average yield of 5.2531%

 

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
92.05	64.15	52.45	8.70

 

End

 

Edited by Ashish Shirke

 

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