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Informist, Wednesday, Mar. 4, 2026

By Vaishali Tyagi

NEW DELHI – Rates on certificates of deposit and commercial papers rose Wednesday due to uncertainty about the impact of the military conflict in West Asia, dealers said. "Why people will take risk in such uncertain environment and therefore they are asking for higher premiums (rates) and hence pushing rates higher," a dealer at a bank said.

In the secondary market, rates on three-month CDs rose to 7.15-7.18% on Wednesday from 7.05-7.10% Monday, dealers said. Rates on six-month CDs rose to 7.10-7.12% from 7.00-7.05% the previous day, and those on one-year CDs rose to 7.00-7.03% from 6.92%. Indicative rates on three-month CPs issued by non-banking finance and manufacturing companies were 7.55-7.68%, up from 7.50-7.65% Monday. Rates on CPs of same maturity issued by manufacturing companies rose to 7.30-7.35% from 7.25-7.30%, dealers said.

Volume in the secondary market picked up as liquidity in the banking system was comfortable, dealers said. Mutual funds, which are flush with funds from inflows at the start of the month, are actively trading papers in the secondary market. The trading volume of CDs was INR 196.97 billion Wednesday, up from INR 100.95 billion on Monday. The traded volume of CPs rose to INR 67.75 billion from INR 23.60 billion Monday.

According to latest data, the net liquidity absorbed from the banking system by the Reserve Bank of India -- a proxy for the liquidity surplus -- was INR 2.72 trillion Monday, up from INR 2.65 trillion Sunday.

In the primary market for CDs, HDFC Bank and Bank of Baroda raised funds, but there was no confirmation from market participants about the quantum and rate.

Most of the fundraising was for rollover of papers maturing in the March quarter and the issuances are likely to rise in the near term, with mutual funds pushing for higher rates, dealers said. "Most of the fundraising through CDs is happening for rollovers and mutual funds are asking for higher rates. Going forward, rates across segments may go higher," the dealer quoted above said.

In the primary market for CPs, National Bank for Agriculture and Rural Development raised INR 60 billion Wednesday through papers maturing in three months at 7.20%. Birla Group Holdings and several other non-banking financial companies raised funds but the amount and rates were not confirmed.

--Primary Market

* HDFC Bank and Bank of Baroda raised funds through CDs

* NABARD and Birla Group Holdings raised funds through CPs

--Secondary market

* Punjab National Bank's CD maturing Thursday was traded 11 times at a weighted average yield of 5.0057%

* Bajaj Finance's CP maturing Thursday was traded six times at a weighted average yield of 5.0282%

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

Edited by Ashish Shirke

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