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Informist, Thursday, Mar. 12, 2026

By Vaishali Tyagi

NEW DELHI – Secondary market volumes for certificates of deposit and commercial papers surged due to selling by mutual funds amid redemption pressure, while they and other participants churned their portfolios, which added to the volume, dealers said. 

Trading volume of CDs in the secondary market was INR 228.40 billion, up from INR 210.00 billion Wednesday, and that of CPs was also higher at INR 132.15 billion from INR 126.40 billion Wednesday. 

Short-term debt remained in a narrow range with upside bias, tracking the rise in corporate bond yields, reflecting ongoing market caution. Yields on corporate bonds rose in the secondary market, tracking the rise in government bond yields, dealers said. Investors remain cautious, assessing the conflict's impact, as market volatility still persists. Rates on CDs with less than one-year maturity rose marginally, dealers said.

In the secondary market, rates on three-month CDs marginally rose to 7.13-7.16% Thursday from 7.10-7.13% Wednesday, while those on six-month CDs were broadly unchanged at 7.19-7.22%. Rates on one-year CDs were also in the narrow range at 6.98-7.00%, compared with 6.98% Wednesday.

Rates on three-month CPs issued by manufacturing companies were largely steady. Indicative rates on three-month CPs issued by non-banking finance companies were similar to the previous session at 7.55-7.57% Thursday, while rates on papers issued by manufacturing companies remained steady at 7.25-7.28%, dealers said.

The quarter-end liquidity crunch is expected to push corporate bond yields and short-term debt rates higher amid selling by mutual funds. The net liquidity absorbed by the Reserve Bank of India from the banking system was INR 2.40 trillion Wednesday, down from INR 2.74 trillion Tuesday.

Post March quarter end, rates on short-term debt instruments are expected to ease, dealers said. "As of now, credit growth is creating pressure on rates and pushing rates higher," a dealer at a state-owned bank said, adding that the new liquidity coverage ratio norms from Apr. 1 are expected to improve liquidity in the banking system.

On Apr. 21, the RBI announced the final guidelines on liquidity coverage ratio, reducing the additional run-off factor for retail deposits which are enabled with internet and mobile banking facilities to 2.5% from the 5% proposed in July 2024 in the draft guidelines. The final guidelines will be effective from Apr. 1, 2026, providing banks sufficient room for the transition.  

--Secondary market

* Punjab National Bank's CD maturing Friday was traded nine times at a weighted average yield of 4.9781%

* Reliance Retail Ventures's CP maturing Friday was traded eight times at a weighted average yield of 4.9815%

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

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

Edited by Deepshikha Bhardwaj

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