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Informist, Friday, May 22, 2026

 

By Meera Nair

 

MUMBAI – Rates on three-month and one-year certificates of deposit were broadly flat Friday as mutual funds, the most active participants in the secondary market, bought and sold short-term debt instruments in these segments. CDs maturing in six months saw the least trades, which pushed rates higher in that segment, they added. 

 

Mutual funds and corporates bought debt instruments to meet their portfolio requirements, while some mutual funds sold amid redemption pressure due to a tightening of the banking system's liquidity surplus, dealers said. "Buying was driven by portfolio needs as all companies have their specific needs, like sometimes they buy bonds and some days they have to add these (short-term debt) instruments, but a few AMCs (asset management companies) faced redemptions due to which they were seen selling," a dealer at a brokerage firm said.

 

The net liquidity absorbed by the RBI – an indication of surplus liquidity in the banking system – was INR 588.76 billion Thursday, the lowest since Mar. 26 and down from INR 1.29 trillion Wednesday, according to the latest data. 

 

On Friday, yields on three-month and one-year certificates of deposit were largely steady. The rates on three-month CDs and one-year CDs were unchanged from Thursday at 7.40-7.45% and 7.80–7.85%, respectively. The rates on six-month CDs, the only segment that saw yields rising, were at 7.85-7.90%, up 15 bps from 7.70-7.75% Thursday.  

 

Yields of commercial papers in all three segments - three-month, six-month, and one-year – were unchanged from Thursday. The three-month 'AAA'-rated commercial papers issued by non-banking finance companies were traded at 7.85-7.90%, six-month at 8.10-8.15% and one-year at 8.15-8.20%. 

 

Market participants said with uncertainty persisting due to the war in West Asia, some traders are still assessing the situation and awaiting further cues before taking positions. "People are in wait-and-watch mode to gauge market direction, which kept yields rangebound across tenures," a dealer said.  

 

Friday, certificates  of deposit worth INR 120.95 billion were traded, up from INR 111.05 billion Thursday, according to data from Clearing Corp. of India. Commercial papers worth INR 44.04 billion were traded Friday, marginally up from INR 43.15 billion Thursday. "Mutual funds and corporates were buying while MFs were also on the selling side," a dealer from a private-sector bank said.

 

Union Bank of India, Bank of Baroda, and HDFC Bank were among those that issued certificates of deposit Friday. Union Bank raised INR 38.50 billion at 7.40% through three-month CDs, according to CCIL data. As of 1732 IST, certificates of deposit worth INR 91.95 billion were issued Friday, up sharply from INR 52.40 billion Thursday, according to the data.

 

Commercial papers worth INR 155.68 billion were issued Friday, up sharply from INR 70.09 billion Thursday. Cholamandalam Investment and Finance Co., National Bank for Agriculture and Rural Development, Manappuram Finance, and SBICAP Securities were among the companies that issued CPs Friday. Cholamandalam Investment Finance raised INR 12.50 billion through a three-month CP at 8.20%, while NABARD raised INR 5.00 billion through a one-month CP at 7.1%. 

 

--Primary market
* Bank of Baroda, HDFC Bank, and Union Bank of India were among those that raised funds via CDs 

* Cholamandalm Investment Finance Co., Manappuram Finance, and NABARD were among those that raised funds via CPs

 

--Secondary market

* Axis Bank's CD maturing Monday was traded nine times at a weighted average yield of 5.33%
* Export-Import Bank of India's CP maturing Monday was traded seven times at a weighted average yield of 5.34%

 

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
Friday	Thursday	Friday	Thursday
120.95	111.05	44.04	43.15

 

End

 

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

 

With inputs from Vaishali Tyagi

Edited by Saji George Titus

 

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