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Informist, Monday, Mar. 30, 2026

 

By Vaishali Tyagi

 

NEW DELHI – The short-term debt market was quiet on the last trading day of the financial year, with no funds raised through certificates of deposit, dealers said. Most issuers had tapped the market to meet their year-end funding needs, they said. Mutual funds were seen selling CDs maturing in May due to redemption pressure, dealers said. 

 

Indian financial markets are shut on Tuesday for Mahavir Jayanti. Financial markets administered by the RBI are also closed on Wednesday to allow banks to close their year-end accounts. "(There have been) no issuances as banks would not prefer doing today as it is the last of the year and the value date will be in the next year," a dealer at a private-sector bank said. "There is also a deposit crunch. Probably, issuances will pick up from next week. Banks also do not have surplus funds, so there is no liquidity."

 

Banks stayed on the sidelines as tight liquidity conditions persisted in the system. The net liquidity absorbed from the banking system by the RBI – a proxy for the liquidity surplus – was INR 1.27 trillion Sunday, similar to Saturday and up from INR 1.14 trillion Friday.

 

Dealers said rates on CDs maturing in one year edged down due to aggressive buying, while rates on three-month paper rose due to continued selling by mutual funds to meet year-end funding needs and amid prevailing uncertainty, dealers said.

 

In the secondary market, rates on one-year CDs fell to 7.10-7.15% from 7.25% the previous day, while those on three-month CDs rose to 7.60-7.70% Monday from 7.58-7.68% Friday, dealers said. Rates on three-month CPs were largely unchanged from the previous day at 7.70-7.85%, dealers said.

 

Merchant bankers said investors prefer one-year CDs to shorter-tenure papers, such as three- or six-month CDs, due to lower reinvestment risk. "With CD rates having moved up, investors are likely to find relatively lower risk, leading to a shift in flows towards the one-year (CD) segment and avoiding shorter-tenure paper," a dealer at a brokerage firm said. "Dealers are adding longer tenure assets as the market is very uncertain these days... you never know when this war in the Middle East (West Asia) will end."

 

Meanwhile, some other market participants expect rates to settle down from second week of April. "People will assess the situation if war continues... things are likely to stay the same, but volatility seems to be contained because people may take a break and stop borrowing for some time... because these days people were raising funds to meet their year-end demand or redemption pressure even though war was there," a dealer at a state-owned bank said. "Now, people can choose to wait and raise funds, which may limit the rise in rates."

 

Trading volume in the secondary market of CDs was INR 147.45 billion Monday, compared to INR 101.75 billion Friday. The traded volume of CPs fell to INR 16.25 billion from INR 28.61 billion Friday.

 

--Primary market

* No funds were raised via CDs.

 

--Secondary market

* Union Bank of India's CD maturing Thursday was traded seven times at a weighted average yield of 7.9797%

* Power Finance Corp.'s CP maturing Apr. 15 was traded once at a weighted average yield of 7.5002%

 

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
Monday	Friday	Monday	Friday
147.45	101.75	16.25	28.61

 

End

 

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

 

Edited by Saji George Titus

 

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