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Informist, Monday, Feb. 9, 2026

 

By J. Navya Sruthi

 

MUMBAI – Rates on certificates of deposits rose marginally in most tenures Monday due to low demand, even as rates on commercial papers remained largely steady, dealers said. Despite the banking system's liquidity surplus, CD rates rose as the Reserve Bank of India failed to announce any liquidity measures at the monetary policy meeting.   

 

"The market was expecting LCR (Liquidity Coverage Ratio) norms in the Friday's policy and a few liquidity measures, but there was nothing. There is no positive news for rates to fall now, and banks are also not buying," a dealer at a state-owned bank said. "Mutual funds are not receiving inflows because of fluctuating returns, and there is also a cap on investments by banks in mutual funds," the dealer said. "Liquidity is not rotating. It is stuck at SDF (Standing Deposit Facility)," the dealer added. 

 

According to the latest data, the net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was at INR 2.97 trillion Sunday, down from INR 3.10 trillion on Saturday and INR 3.63 trillion Friday. Inflows from open market operation auction and dollar-rupee buy-sell swap boosted the system's liquidity Friday, but around INR 600 billion worth of outflows for excise duty payments led to low liquidity Saturday.

 

Rates on three-month CDs rose to 7.05% from 7.00% Friday. Rates on one-year CDs also rose to 7.00-7.05% from 7.00% Friday and were aligned with rates on three-month CDs. Dealers said demand in the one-year segment is comparatively higher than in the three-month segment. On six-month CDs, rates were up at 7.15-7.20% from 7.10-7.15%.

 

Indicative rates on three-month commercial paper issued by non-banking finance companies were 7.45%, largely unchanged from the previous day, and rates on CPs issued by manufacturing companies were steady at 7.20-7.25%.   

 

"Banks are mostly preferring liquid funds, mostly in one-to two-month papers as rates eased there," said a dealer at a domestic asset management company. "Things (rates on three-month and forward papers) will change (ease) when banks have clarity about VRRR (variable rate reverse repo). I don't think so, the RBI will conduct, but banks are just cautious," the dealer added. 

 

Indian Bank raised INR 31 billion through three-month CDs at 7.04% Monday and Union Bank has raised INR 29 billion through the same tenure paper at 7.07%, dealers said. These were the two CD issuances in the primary market Monday, against none on Friday, dealers said. 

 

In the CP market, total issuances were INR 64.75 billion, as against none Friday, dealers said. Kotak Securities issued an intra-month maturity CP at 6.40% and raised INR 500 million, Larsen & Toubro raised INR 10 billion through CPs maturing in mid-March at 6.10%. Reliance Retail Ventures raised INR 40 billion through three-month CPs at 7.18%. Network 18, Godrej Industries, HDFC Securities, and Birla Group Holding also raised funds through CPs Monday.  

 

The trading volume in CDs in the secondary market Monday was INR 59.50 billion, sharply down from INR 165 billion Friday. Trading volume in the CP market was INR 49.60 billion, marginally higher than INR 46.35 billion Friday. Dealers said the lack of an announcement on liquidity measures Friday resulted in thin trading volumes.

 

--Primary market

* Indian Bank and Union Bank raised funds through CDs.

* Kotak Securities, L&T, Reliance Retail Ventures, Network18, Godrej Industries, HDFC Securities, and Birla Group Holding issued CPs. 

 

--Secondary market

* Karur Vysya Bank's CD maturing Tuesday was traded twice at a weighted average yield of 4.6361%

* HDFC Securities' CP maturing Tuesday was traded once at a weighted average yield of 4.5631%

 

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
Monday	Friday	Monday	Friday
59.50	165.00	49.60	46.35

 

End

 

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

 

Edited by Saji George Titus

 

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