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Informist, Friday, Jan. 30, 2026

By J. Navya Sruthi

MUMBAI – Rates on certificates of deposit and commercial papers of most tenors fell following the Reserve Bank of India's liquidity measures, dealers said. The central bank Friday conducted two 90-day variable repo rate auctions to support liquidity in the banking system.

Rates on three-month CDs were steady from the previous day at 7.20-7.25%, dealers said. Rates on six-month CDs were down at 7.20% from 7.28-7.32% Thursday. Rates on one-year CDs were significantly lower at 7.05% from 7.15-7.20% the previous day.

The RBI received bids worth INR 950.62 billion at the first 90-day variable rate repo auction and accepted bids for INR 250.04 billion. It conducted another 90-day variable rate repo auction for INR 2 trillion from 1300 IST to 1330 IST and took all bids worth INR 1.12 trillion.

The fall in yields led to more CD issuances in the primary market in the one-year segment. The total CD issuances in the primary market on Friday were INR 71.50 billion. There were no CD issuances Thursday.

Indian Bank raised INR 13.50 billion through two CDs maturing in one year. It had raised INR 10 billion and INR 3.5 billion at 7% and 6.95%, respectively, dealers said. The Small Industries Development Bank of India and the National Bank for Agriculture and Rural Development also raised funds in the one-year segment. NABARD issued two one-year CDs worth INR 15 billion and INR 30 billion at 7.15% and 7.20%, respectively.

Dealers said the RBI should have waited till Monday to conduct the second 90-day VRR auction. "They (RBI) should have waited till Monday. Rates (in tri-party repo and call money markets) were down by 1200 (IST) and also most of the borrowing for day was done before second VRR," a dealer at a state-owned entity said. Dealers said if the RBI had conducted this second 90-day VRR on Monday, then it would have been completely subscribed.

Dealers do not see rates falling further due to excess supply of instruments and as the liquidity crunch in the system continues. "Whenever rates fall below 7%, banks issue CDs which add to supply. I don't think rates will fall before March," a dealer at a state-owned bank said. "This (high rates) will be the case till March," the dealer added.

Despite multiple open market operation auctions since December, liquidity in the banking system has remained below the comfortable level of INR 1 trillion. The net liquidity absorbed in the banking system by the RBI – a proxy for the liquidity surplus – was INR 829.68 billion Thursday, up from INR 677.08 billion Wednesday.

Rates on three-month CPs issued by non-banking financial companies fell to 7.60% from 7.80% Thursday and indicative rates on papers issued by manufacturing companies fell to 7.30% from 7.40% Thursday.

Total CP issuances in the primary market Friday were INR 25.25 billion, against INR 24.25 billion Thursday. Kotak Securities raised INR 2 billion at 7.95% and ICICI Securities raised INR 2.75 billion at 8%. Dealers said the Kotak Securities deal happened before the announcement of the second 90-day VRR auction, which is why the rate was higher than market rates. However, after the auction announcement, rates fell.

Aditya Birla Housing Finance issued a three-month CP for INR 3 billion at 7.30% and Godrej Consumer Products issued a CP in the same segment for INR 9.50 billion at 7.45%. Axis Securities and Motilal Oswal Financial Services also issued CPs Friday.

Trading volume of CDs in the secondary market was INR 79.45 billion Friday, down from INR 106.95 billion Thursday. Trading volume of CPs was INR 22.42 billion, down from INR 45.00 billion. 

--Primary market

* Indian Bank, NABARD, and SIDBI raised funds through CDs

* Kotak Securities, ICICI Securities, Axis Securities, Aditya Birla Housing Finance, and Motilal Oswal Financial Services raised funds through CPs

--Secondary market

* Indian Bank's CD maturing Monday was traded five times at a weighted average yield of 5.4379%

* Hero Fincorp's CP maturing Monday was traded twice at a weighted average yield of 5.6957%

The 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:

End

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

Edited by Ashish Shirke

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