More Stories

Informist, Monday, Apr. 6, 2026

By Vaishali Tyagi

NEW DELHI – Rates on three-month and six-month certificates of deposit fell 3-4 basis points on Monday because of strong demand from mutual funds amid comfortable liquidity in the banking system. Mutual funds, who are flush with surplus funds, were active buyers, dealers said. "Buying interest from mutual funds pushed rates lower mainly in three- and six-month tenures and they are yet to receive even more funds, which will push rates lower," a dealer at a state-owned bank said.  

The net liquidity absorbed by the Reserve Bank of India, a proxy for liquidity surplus in the system, was INR 3.68 trillion Sunday, lower than INR 3.72 trillion Saturday. "Ample liquidity in the banking system has weighed on overnight rates and CD rates maturing up to June," a dealer at another state-owned bank said. Dealers expect rates on three-month CDs to fall going forward as new liquidity coverage ratio norms are likely to lead to rise in liquidity in the banking system by INR 200 billion to INR 500 billion.

In the secondary market, rates on three-month CDs fell to 6.43-6.50% from 6.52-6.55% Thursday due to strong demand, dealers said. Rates on six-month CDs fell to 7.24-7.26% from 7.25-7.30% Thursday. Rates on one-year CDs remained broadly unchanged at 7.28-7.30%.

The yield curve steepened on Monday, with rates on short-term papers falling and the rate on CD maturing in June quoting at 6.40-6.50%, dealers said. Credit offtake from banks is typically low in April as companies do not need funds immediately. With limited credit growth expected this month, most banks are unlikely to issue CDs now unless required, they said.

Activity was low in commercial papers, dealers said. "Most companies and non-banking financial companies are preferring bank lines and if the complete requirement is not met then they are issuing these (CP) instruments," the dealer with the second state-owned bank said. "For example, if they (companies) get 80% of their required amount from banks then the remaining 20% they are borrowing through CPs," the dealer quoted above said.

Rates on three-month CP issued by non-banking finance companies fell to 7.30-7.35% from 7.55-7.60% Thursday. In the CP market, total issuances in the primary market were slightly over INR 37 billion, sharply up from INR 6 billion on Thursday, according to data available on the Clearing Corp. of India F-TRAC platform at 1948 IST. Reliance Retail Ventures raised INR 33.5 billion through CP maturing on Jun. 15 at 6.5998%.

 
Dealers are waiting for the decision of the RBI's Monetary Policy Committee Wednesday. "The RBI will revise the inflation and growth estimates this policy," the dealer at the state-owned bank quoted above said. "It will increase inflation estimate and cut the growth projection. But mostly wait and watch as there is no clarity about duration of the war in West Asia."

Trading volume in the secondary market of CDs was INR 165.65 billion Monday, up from INR 100.30 billion Thursday. The traded volume of CPs rose to INR 28.75 billion from INR 26.25 billion Thursday.

--Primary market

* Funds were raised via CDs

* Reliance Retail Ventures raised funds via CPs

--Secondary market

* Axis Bank's CD maturing on Apr. 12 was traded once at a weighted average yield of 6.1494%

* Export Import Bank of India's CP maturing on May 7 was traded twice at a weighted average yield of 6.4003%

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 Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.