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Informist, Wednesday, Feb. 18, 2026

 

By J. Navya Sruthi

 

MUMBAI – Rates on certificates of deposit and commercial papers were up Wednesday due to selling by mutual funds amid redemption pressure, dealers said. This led to lower volume in the secondary market, they added.     

 

In the secondary market, indicative rates on one-year CDs were up at 6.90-6.92% from 6.82-6.85%. Rates on three-month and six-month CDs also rose 5-6 basis points from the previous day at 7.03-7.05% and 6.95-7.00%, respectively, dealers said. Indicative rates on CPs issued by non-banking finance companies were up 5 bps at 7.45-7.50% and those by manufacturing companies were also up 5 bps at 7.20-7.25%, dealers said.

 

The trading volume of CDs in the secondary market Wednesday was INR 153.35 billion, significantly down from INR 236.80 billion Tuesday. The trading volume in the CP market was up at INR 53.25 billion, from INR 42.85 billion Tuesday. In the primary market, Central Bank of India raised INR 10 billion Wednesday through a CD maturing in three months at 7.19%. Other major issuers were IndusInd Bank, Punjab National Bank, IDFC First Bank, Indian Overseas Bank, Canara Bank, Federal Bank and DCB Bank.

 

"It is usually like this, first two weeks we can see rates falling but later rise again on redemption pressure," a dealer at a state-owned bank said. The dealer expects rates to fall 5-10 bps by the first week of March. "One-year CD rates may fall to 6.80-6.95% by March first week as GST (goods and services tax) outflows will be done and month-end inflows will support liquidity," the dealer said. "After year-end and relaxation of LCR (liquidity coverage ratio) norms, rates on one-year AAA (rating) CD can also fall to 6.70%," the dealer said. 

 

In April, the Reserve Bank of India said banks would need to maintain 2.5% run-off factor for internet- and mobile banking-enabled retail deposits, revising downwards the July 2024 guidelines that had proposed a 5% run-off factor. The new directions will come into effect from Apr. 1. 

 

Dealers expect INR 1.5 trillion to INR 1.8 trillion worth of outflows for GST payments and expect systemic liquidity to fall to or below INR 1 trillion by next week. 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 2.62 trillion Tuesday, up from INR 2.59 trillion Monday. On Tuesday, there was INR 19.74 billion worth of inflows for coupons and redemption of state bonds. 

 

--Primary Market

* Central Bank of India, IndusInd Bank, Punjab National Bank, IDFC First Bank, Indian Overseas Bank, Canara Bank, Federal Bank and DCB Bank raised funds through CDs.

 

--Secondary market

* IndusInd Bank's CD maturing Friday was traded twice at a weighted average yield of 5.0932%

* PNB Housing Finance's CP maturing Friday was traded once at a weighted average yield of 5.1662%

 

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
Wednesday	Tuesday	Wednesday	Tuesday
153.35	236.80	53.25	42.85

 

End

 

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

 

Edited by Tanima Banerjee

 

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