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Informist, Monday, May 11, 2026

 

By Meera Nair

 

MUMBAI – Liquidity crunch and immediate demand for loans pushed the rates on certificates of deposit higher Monday, dealers said. The volume of CDs and commercial papers rose sharply Monday due to demand for funds.

 

As of 1851 IST, CDs worth INR 53.75 billion were issued Monday, according to data from the Clearing Corp. of India. This was sharply up from INR 29.5 billion worth of CDs issued Friday. CPs worth INR 75.93 billion were issued Monday, up from INR 70.80 billion worth of CPs issued Friday. 

 

"The data from the Consumer Price Index for the month ended April will come tomorrow (Tuesday), and we expect the price to be on the higher side," a dealer from a private-sector bank said. "As the excise duty outflow has happened, we can expect for the VRR (variable repo rate auction) to happen anytime soon, so that the current average rate, which is at 5.14%, can be brought down."  

 

Another dealer from a private-sector bank said that Prime Minister Narendra Modi's remarks on gold has put mutual funds under redemption pressure, resulting in higher rates.

 

The three-month 'AAA'-rated CDs were traded at 6.60-6.65% Monday compared to 6.55-6.60% Friday in the secondary market, while a 'AAA'-rated six-month CD was traded at 6.80-6.85%, down from 6.95-7.00% Friday. The rate on a one-year CD was sharply up at 7.25% from 7.10% Friday. "Trading volumes were mostly seen in up to three-months segment, with banks and mutual funds as major market participants," a dealer from the private-sector bank said. 

 

"For the current week and the next, the liquidity is seen between 2-3 lakh crore (INR 2 trillion-INR 3 trillion) which should be enough, but despite the ample liquidity, I also see a few banks issuing certificates of deposit in the coming week," the dealer mentioned above said. The net liquidity absorbed by the Reserve Bank of India--an indicator of surplus liquidity in the banking system--was INR 2.22 trillion Sunday, up from INR 2.15 trillion Saturday.

 

'AAA'-rated CPs were traded 10 basis points higher in three-month, six-month, and one-year segments. Rates on three-month CPs were 6.70-6.75%, while six-month CPs were at 6.90-6.95% and one-year were dealt at 7.35% levels. "We expect CPs from oil marketing companies to rise as the government is not ready to increase oil prices," another dealer from a private sector bank said. 

 

IndusInd Bank, IDBI Bank, Bank of India, and IDFC FIRST Bank were among those that issued CDs Monday, according to data from the Clearing Corp. of India. IndusInd Bank raised INR 18.75 billion at 6.80% through a three-month CD, while IDBI Bank raised INR 12.50 billion for the same tenure at 6.72%. Bank of India and IDFC FIRST Bank raised INR 10 billion each through three-month CDs at 6.63% and 6.75%, respectively.

 

The National Bank for Financing Infrastructure and Development and Sundaram Finance Ltd. were among those that issued CPs. NaBFID raised INR 14.50 billion at 6.55% through a three-month CP, while Sundaram Finance raised INR 8.05 billion at 7.72%.

 

--Primary market
* Bank of Baroda, IndusInd Bank were among those that issued CD

* HDFC Securities, NaBFID were among those that raised funds via CPs

 

--Secondary market

* Indian Bank's CD maturing Tuesday was traded four times at a weighted average yield of 5.15%
* Aditya Birla Housing Finance's CP maturing Tuesday was traded once at a weighted average yield of 5.15%

 

Following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed by Clearing Corp. of India's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Monday	Friday	Monday	Friday
57.65	74.95	75.93	39.89

 

End

 

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

 

With inputs from Nandini Sinha

Edited by Tanima Banerjee

 

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