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Informist, Tuesday, May 19, 2026

By Meera Nair

MUMBAI – Rates on certificates of deposit and commercial papers were higher Tuesday as the liquidity surplus in the banking system continued to be lower than a week ago, dealers said. Higher rates in the market kept most CD issuers away from the primary market, dealers said. Most investors prefered to trade three month certificates of deposit due to prevailing global uncertainties. 

Rates on three-month, six-month, and one-year CD were all up 15 basis points over Monday. The three-month 'AAA'-rated CD were traded at 7.20-7.25% Tuesday, up from 7.05-7.15% Monday, while six month CD were traded at 7.40-7.45%, up from 7.25-7.35% Monday. One-year CD was traded at 7.65–7.70% from 7.50–7.60% Monday. Three-month 'AAA'-rated CPs issued by non-banking finance companies were traded higher at 7.75-7.80%. Six-month 'AAA'-rated CPs were traded at 7.90-7.95% and one-year CPs were traded at 8.00-8.20%. 

The net liquidity absorbed by the Reserve Bank of India--an indicator of surplus liquidity in the banking system--was INR 1.82 trillion Monday, up from INR 1.42 trillion Sunday but still lower than INR 2.48 trillion Friday. Although the RBI conducted a variable rate repo auction for INR 1 trillion Monday to infuse liquidity into the system, poor subscription at the auction meant only INR 160.50 billion of liquidity was added to the system through the seven-day auction.

Certificates of deposit worth INR 117.20 billion were traded in the secondary market Tuesday, significantly higher than the INR 97.90 billion traded Monday, according to data from the Clearing Corp. of India. Commercial papers worth INR 28.20 billion were traded Tuesday, down from INR 45.80 billion Monday. "Mutual Funds and small co-operative banks were buying while the selling pressure continues to be from mutual funds," a dealer at a brokerage firm said. 

Other than the liquidity crunch, higher supply of CD and CPs in the primary market so far in May also kept rates in the secondary market elevated. Mutual funds were asking for higher yields on CD issuances in the primary market, a dealer at a private sector bank said. 

Currently, market participants are in wait-and-watch mode for more clarity on the war in West Asia, dealers said. "Three month papers are the most traded as investors are not preferring papers beyond six months now because of prevailing uncertainty," the dealer at the private sector bank said. 
 

UCO Bank was the only one that issued a CD Tuesday. It raised INR 32.50 billion at 6.20% by issuing one-month paper, according to data from the Clearing Corp. of India. Jamnagar Utilities Power Pvt. Ltd., Aditya Birla Capital Ltd., Kotak Securities, and Motilal Oswal Financial Services Ltd. were among the companies that issued CPs Tuesday. Jamnagar Utilities Power raised INR 13 billion through a three-month CP at 7.15% while Aditya Birla Capital raised INR 7.5 billion through a paper of the same maturity at 7.76%.

--Primary market
* UCO Bank raised funds via CD 

* Jamnagar Utilities Power Pvt. Ltd., National Bank for Agriculture and Rural Development, Cholamandalam Investment anf Finance Co., and Aditya Birla Real Estate were among those that raised funds via CP

--Secondary market

* Union Bank of India's CD maturing Wednesday was traded eight times at a weighted average yield of 5.15%
* Relaince Retail Ventures Ltd.'s CP maturing Wednesday was traded eight times at a weighted average yield of 5.14%

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

End

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

With inputs from J. Navya Sruthi

Edited by Pankaj Aher

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