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Informist, Friday, Feb. 6, 2026

 

By J. Navya Sruthi

 

MUMBAI – Yields on short-term debt instruments rose Friday after having fallen about 10 basis points after the India-US trade deal was announced late Monday. Yields rose, despite the comfortable liquidity surplus in the banking system, following the lack of an announcement by the Reserve Bank of India on liquidity measures in its monetary policy.   

 

Yields on three-month certificates of deposit were at 7.00-7.05%, up from 6.96% Thursday. Yields on one-year CD were also up at 7.00% from 6.90% the previous day. Yields on six-month CD were up at 7.10-7.15% from 7.03-7.07%, dealers said. Similarly, yields on three-month commercial paper issued by non-banking finance companies were at 7.45-7.50%, up from 7.43-7.45%. Yields on CP issued by manufacturing companies also rose 5-7 bps to 7.20-7.25%.

 

"Yields are up as the market is taking cues from the borrowing plan for next fiscal as there is no liquidity measure announced by the RBI," a dealer at a state-owned company said. "There were also no major deals in the primary market and volumes were also lower in the secondary market."

 

Announcing the RBI's monetary policy, Governor Sanjay Malhotra said the central bank's liquidity management would be pre-emptive with sufficient allowance for unanticipated fluctuations in government balances, changes in currency in circulation, and forex intervention. However, he did not announce any specific measures to infuse liquidity.
 

Meanwhile, the net liquidity absorbed from the banking system by the RBI--a proxy for the liquidity surplus--rose to INR 2.12 trillion Thursday, up from INR 1.96 trillion Wednesday. "I hope he (the RBI governor) will not announce any VRRR (variable rate reverse repo auction) now. If rates in call market remain low like now, then there will be a spill-off effect in other tenures too," a dealer at a private-sector bank said. 

 

The weighted average call rate was 4.98% Wednesday, the lowest since Aug. 4, 2022, excluding Saturdays. Addressing the media after the Monetary Policy Committee meeting outcome, Malhotra said the RBI does not expect the call rate to be lower than its standing deposit facility rate of 5% and aims to keep the call rate at the repo rate, which is 5.25%.

 

The CD trading volume in the secondary market Friday was INR 165 billion, significantly down from INR 250.30 billion Thursday. The CP trading volume was sharply down at INR 46.35 billion from INR 103.85 billion. Dealers said the lack of an announcement on liquidity measures resulted in thin trading volumes.

 

--Primary market

* No deals of CD, CP were seen in the market Friday, according to market sources.

 

--Secondary market

* Bank of Baroda's CD maturing Monday was traded nine times at a weighted average yield of 4.5762%

* Bajaj Financial Securities CP maturing Tuesday was traded once at a weighted average yield of 5.7679%

 

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:

 

Certificates of deposit		Commercial paper
Friday	Thursday	Friday	Thursday
165.00	250.30	46.35	103.85

 

End

 

Edited by Rajeev Pai

 

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