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Informist, Thursday, May 21, 2026

 

By Meera Nair

 

MUMBAI – Rates on three-month and six-month certificates of deposit and commercial paper rose Thursday as liquidity conditions tightened in the banking system after goods and services tax-related outflows, dealers said. The one-year CD were unchanged from the previous day. Market sentiment was negative throughout the day after reports that the Reserve Bank of India is considering all available options to stabilise the rupee, including a rate hike. This pushed yields on certificates of deposit and commercial paper to their highest level of the month.

Yields on short-term instruments have risen by 65-100 basis points across tenures since Apr. 29, according to data released by the Clearing Corp. of India Ltd. On Thursday, yields on three-month and six-month CDs were up 10-20 basis points over Wednesday. Three-month "AAA"-rated CD were traded at 7.40-7.45%, up 10 bps from Wednesday, while six-month CD were traded at 7.70-7.75%, up 20 bps. Rates on one-year CD were unchanged at 7.80–7.85%.

 

Three-month "AAA"-rated commercial paper issued by non-banking finance companies were traded at 7.85-7.90%, up 5 bps from Wednesday. Similarly rated six-month CP were traded at 8.10-8.15% Thursday, up 10 bps. One-year CP were traded at 8.15-8.20%, up 5 bps.

 

The net liquidity absorbed by the Reserve Bank of India--an indicator of surplus liquidity in the banking system--was INR 1.29 trillion Wednesday, down from INR 1.51 trillion Tuesday. The liquidity surplus has continued to fall because of outflows for GST payments. Outflows of around INR 400 billion for GST payments were recorded Wednesday, dealers said. They said total outflows of INR 1.8 trillion to INR 2 trillion for GST payments are scheduled in the current week.

 

To support the banking system's liquidity, the RBI conducted an overnight variable rate repo auction for INR 1.25 trillion earlier in the day. However, the auction was undersubscribed and the RBI only received bids worth INR 253.60 billion. "This is the second consecutive day VRR is happening due to the GST outflows, but the participation was still low," a dealer at a private-sector bank said. 

 

Thursday, certificates of deposit worth INR 111.05 billion were traded by 1700 IST, up sharply from INR 70.47 billion Wednesday, according to data from CCIL. Commercial paper worth INR 43.15 billion were traded Thursday, also up from INR 38.35 billion the previous day. "Mutual funds and corporates were buying while MFs were also on the selling side, managing thier portfolio," the dealer said.

 

Bank of Baroda and HDFC Bank Ltd. were among those that issued certificates of deposit Thursday. Bank of Baroda raised INR 4.50 billion at 7.20% through three-month CD, according to CCIL data. At 1710 IST, certificates of deposit worth INR 52.40 billion were issued, down slightly from INR 53.90 billion Wednesday, according to the data.

 

Commercial paper worth INR 70.09 billion were issued Thursday, up sharply from INR 63.78 billion Wednesday. Hindustan Petroleum Corp. Ltd., HDFC Securities Ltd., HSBC Investdirect Financial Services I Ltd., and Mirae Asset Financial Services India Pvt. Ltd. were among the companies that issued CP. Hindustan Petroleum raised INR 10 billion through a three-month CP at 7.23% while HSBC Investdirect raised INR 1 billion through three-month CP at 8.13% and Godrej Industries Ltd. raised INR 750 million through a paper of the same maturity at 6.89%.

 

--Primary market
* Bank of Baroda, HDFC Bank Ltd. were among those that raised funds via CD 

* Hindustan Petroleum Corp. Ltd., HDFC Securities Ltd., and Aditya Birla Capital Ltd. were among those that raised funds via CP

 

--Secondary market

* IndusInd Bank Ltd.'s CD maturing Friday was traded four times at a weighted average yield of 5.28%
* Reliance Retail Ventures Ltd.'s CP maturing Friday was traded five times at a weighted average yield of 5.26%

 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1700 IST, as detailed on CCIL's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Thursday	Wednesday	Thursday	Wednesday
111.05	70.47	43.15	38.35

 

End

 

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

 

Edited by Rajeev Pai

 

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