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Informist, Wednesday, Mar. 25, 2026

 

By J. Navya Sruthi

 

MUMBAI – Rates on certificates of deposits maturing in three months rose due to continued selling by mutual funds to meet year-end requirements, dealers said. Market participants expect rates on these instruments to remain rangebound with an upward bias for the rest of the month. Rates on one-year CDs and three-month commercial papers were largely steady from the previous day due to low volumes in these segments. 

 

In the secondary market, rates on three-month CDs were 7.55-7.65% Wednesday, up from 7.45-7.55% Tuesday. Rates on six-month and one-year CDs were steady from the previous day at 7.50-7.60% and 7.30-7.40%, respectively, dealers said. Rates on three-month CPs were largely unchanged from the previous day at 7.70-7.85%, dealers said.  

 

In the primary market, Punjab National Bank raised INR 10 billion through a six-month certificate of deposit at 7.52%, a dealer at the bank said. 

 

A dealer at a private bank said that rates on most CDs maturing in May have surpassed 8% due to strong selling pressure in this segment. The rate on the Union Bank of India's CD maturing on May 5 was at 8.30%. Rates on CDs maturing in May issued by other banks were also over 8% in the secondary market. Similarly, rates on CPs maturing in May were also above 8%.   

Usually, mutual funds sell corporate debt instruments such as CDs, CPs, and corporate bonds before year-end to meet redemption pressure from banks, which need liquidity to pay advance tax and goods and services tax. Total tax outflows from the banking system in March are estimated at around INR 3 trillion-INR 4 trillion, dealers said. Some mutual funds also sell three-month debt instruments and buy one-year papers as part of portfolio churning.

 

The dealer at a state-owned bank said rates are likely to remain at the same level with a slight upward bias for the rest of the month, with just two working days left. The net liquidity absorbed by the RBI, which is a proxy for liquidity surplus, was at INR 616.29 billion Tuesday, up from INR 261.96 billion Monday.

 

In order to provide daily support for the banking system at the end of the financial year, the Reserve Bank of India Tuesday said it will infuse transient liquidity through two variable rate repo auctions. It will conduct a six-day VRR auction for INR 750 billion Friday and a three-day VRR auction for INR 500 billion Monday. So far this fortnight, the RBI has infused INR 2.08 trillion of transient liquidity through four VRR auctions, of which only INR 558.37 billion infused through a three-day VRR auction Tuesday is currently in the banking system.

 

--Primary market

* Punjab National Bank, HDFC Bank, Union Bank, IDBI Bank, and Punjab & Sind Bank raised funds via CDs.

* HDB Finance, Export-Import Bank of India, Godrej Industries, Tata Capital, and Jio Credit raised funds via CPs.

 

--Secondary market

* State Bank of India's CD maturing Friday was traded nine times at a weighted average yield of 5.2919%

* Small Industries Development Bank of India's CP maturing Friday was traded 13 times at a weighted average yield of 5.3460%

 

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
102.60	103.00	47.25	43.50

 

End

 

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

 

Edited by Saji George Titus

 

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