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Informist, Monday, Mar. 16, 2026

By J. Navya Sruthi

MUMBAI – Rates on certificates of deposits rose Monday due to a rise in overnight rates and redemption pressure on mutual funds due to advance tax payments, dealers said. In the secondary market, rates on three-month CDs surged to 7.36-7.40% Monday from 7.30-7.35% Friday, while rates on one-year CDs rose to 7.40% from 7.32-7.35% Friday. On the commercial paper side, indicative rates for three-month CPs issued by non-banking finance companies were steady at 7.65%.

The one-day interbank call rate ended at 5.31% Monday, sharply up from Friday's close of 5.15% for three-day loans.

Trading volume of CDs in the secondary market was INR 103.15 billion Monday, marginally down from INR 109.60 billion Friday. Secondary market CPs volume was at INR 52.50 billion, up from INR 35.00 billion Friday. 

Dealers said mutual funds were selling CDs and CPs in the secondary market due to redemption pressure from corporates to pay advance corporate and income tax for the quarter. According to market participants, advance tax outflows were estimated at around INR 1.5 trillion, with the payment deadline falling on Mar. 15.

"NABARD (National Bank for Agriculture and Rural Development) issued July 2029 bonds at 7.44% and that impacted yields on corporate bonds and pushed CD rates higher," a dealer at a state-owned bank said.

NABARD raised INR 72.65 billion through three-year and three-month bonds at a coupon of 7.44%.

According to data from the Clearing Corp. of India Ltd.'s F-Trac platform, NABARD also raised INR 72.75 billion Monday through a three-month CP at 7.49%. Friday, NABARD had raised INR 31.25 billion through a three-month CP at 7.27%.      

Although the liquidity surplus fell over the weekend due to tax payments, dealers said that the surplus is comfortable as it remained above the INR-2-trillion level. The banking system liquidity surplus was INR 2.08 trillion Sunday, down from INR 2.10 trillion Saturday and INR 2.13 trillion Friday. However, dealers said inflows of INR 500 billion Monday from the Reserve Bank of India's second tranche of open market operations auction Friday will support the liquidity surplus in the system.  

The RBI announced an INR 1.5 trillion seven-day variable-rate repo auction on Monday to support the systemic liquidity surplus ahead of INR 1.8 trillion in outflows for goods and services tax payments. Most dealers were expecting a VRR this week, ahead of GST payments, and with only eight working days left in the current fortnight to Mar. 31. A few dealers were also expecting the RBI to announce another open market operations auction this week to support gilt prices and also infuse durable liquidity. 

--Secondary market

* HDFC Bank's CD maturing Tuesday was traded twice at a weighted average yield of 5.3663%

* ICICI Securities' CP maturing Tuesday was traded twice at a weighted average yield of 5.3186%

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 Saji George Titus

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