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Informist, Thursday, Mar. 5, 2026

 

By Vaishali Tyagi

 

MUMBAI – Rates on certificates of deposit fell slightly on Thursday as mutual funds and banks continued to buy short-term debt instruments, dealers said. "Investors are sitting on cash, as and when they see an opportunity to make a trade, they buy high-yielding papers while selling other low-yielding assets," a dealer at a brokerage firm said. "Rates of CPs (commercial papers) and CDs fell slightly as MFs (mutual funds) were active on both sides...it was an overall recovery over yesterday, with positive moves across duration and assets."

 

In the secondary market, rates on three-month CDs fell marginally to 7.12-7.15% on Thursday from 7.15-7.18% Wednesday, dealers said. Rates on six-month CDs were down at 7.05-7.08% from 7.10-7.12% the previous day, and those on one-year CDs fell to 6.95-9.99% from 7.00-7.03%. Indicative rates on three-month CPs issued by non-banking finance were unchanged at 7.55-7.65%.

 

Volume in the secondary market remained on the higher side even though it fell compared to Wednesday as liquidity in the banking system was comfortable, dealers said. The trading volume of CDs was INR 171.45 billion, down from INR 196.97 billion on Wednesday. The traded volume of CPs was INR 58.90 billion, down from INR 67.75 billion Wednesday. According to latest data, net liquidity absorbed by the RBI from the banking system -- a proxy for the liquidity surplus -- was INR 2.67 trillion Wednesday, slightly down from INR 2.72 trillion Tuesday.

 

Dealers said activity in the CD market has picked up as banks are raising funds for lending and for rolling over instruments that are maturing, and more issuances are expected as the end of the financial year nears. "Due to the uncertain environment, banks are seeking liquidity via CDs instead of bonds, but they may issue bonds later if credit demand picks up," the dealer quoted above said.

 

In the primary market, Canara Bank raised INR 7 billion through one-month CD at 7.05%. Bank of Baroda, HDFC Bank, and Kotak Mahindra Bank also raised funds through CDs, but there was no confirmation from market participants about the quantum and rates.

 

"With issuers needing to meet investor demands to get capital and weak participation by MFs due to redemptions, rates may go higher," the dealer said.

 

--Primary Market

* Canara Bank, Kotak Mahindra Bank, Bank of Baroda, and HDFC Bank raised funds through CDs

 

--Secondary market

* Union Bank of India's CD maturing Friday was traded five times at a weighted average yield of 4.9169%

* ICICI Securities' CP maturing Friday was traded five times at a weighted average yield of 4.9459%

 

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
Thursday	Wednesday	Thursday	Wednesday
171.45	196.97	67.75	67.75

 

End

 

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

 

Edited by Ashish Shirke

 

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