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Informist, Tuesday, May 26, 2026

 

By Meera Nair

 

MUMBAI – Rates on three-month and six-month commercial papers rose due to lower liquidity surplus in the banking system and an increase in supply of papers in these segments, dealers said. However, rates on one-year commercial papers remained steady. "There was strong activity in the primary market of CPs today (Tuesday), as there was ample supply of CPs maturing in the three to six-month segment... which led to a rise in rates," a dealer at a brokerage firm said. 

 

The Reserve Bank of India's net liquidity absorption, a proxy for surplus liquidity in the banking system, was at INR 672.85 billion Monday, compared with INR 1.72 trillion at the beginning of the month, according to central bank data. Liquidity conditions improved marginally on Monday due to coupon payments and redemptions of state bonds totalling INR 114.94 billion, as well as gilt coupon payments totalling INR 60.27 billion.

 

Yields on AAA-rated three-month CPs issued by non-banking finance companies were at 8.05-8.10% Tuesday, up 10 basis points from 7.95-8.00% Monday. Yields on six-month CPs were at 8.15-8.20%, up 5 basis points from 8.10-8.15% Monday. One-year CPs were traded at 8.20-8.25%, unchanged from Monday. 

 

Rates on certificates of deposit remained unchanged across tenures Tuesday due to low volume across segments amid prevailing uncertainty over the war in West Asia, dealers said. A few mutual funds continued selling to meet month-end requirements, they said. 

 

Yields on AAA-rated three-month, six-month, and one-year CDs were unchanged at 7.62-7.67%, 7.80-7.90%, and 7.85-7.95%, respectively. CDs maturing in January, February, and March were the most actively traded in the secondary market. "The yields on CPs and CDs are likely to rise in the first week of June as there are a lot of rollovers expected in the market," a dealer at a brokerage firm said.

 

In the secondary market, certificates of deposit worth INR 68.65 billion were traded as of 1705 IST on Tuesday, sharply lower than INR 133.90 billion on Monday, according to data from the Clearing Corp of India Ltd. Commercial papers worth INR 55.40 billion were traded Tuesday, up from INR 46.55 billion on Monday. Mutual funds and corporates were among the buyers in the secondary market, while a handful of mutual funds also remained on the selling side.

 

As of 1806 IST, certificates of deposit worth INR 52.50 billion were issued on Tuesday, sharply down from INR 169.05 billion on Monday. Bank of Baroda, Jammu and Kashmir Bank, and IDFC First Bank were among the issuers of certificates of deposit Tuesday. Bank of Baroda raised INR 24 billion through a three-month CD at 7.50%, while Jammu and Kashmir Bank raised INR 16.5 billion through a three-month CD at 8.0%, CCIL data showed.

 

As of 1806 IST, CPs worth INR 53.45 billion were issued Tuesday, up from INR 36.10 billion on Monday, according to CCIL data. Navi Finserv, Hero FinCorp, Tata Steel, and Aditya Birla Capital were among the companies that issued commercial papers Tuesday. Tata Steel raised INR 5.75 billion and Hero FinCorp raised INR 4 billion through CPs. 

 

--Primary market
* Bank of Baroda, Jammu and Kashmir Bank, and IDFC First Bank were among those that raised funds via CDs 

* Navi Finserv, Hero FinCorp, Tata Steel, and Aditya Birla Capital were among those that raised funds via CPs

 

--Secondary market

* Canara Bank's CD maturing Wednesday was traded four times at a weighted average yield of 5.23%
* Export-Import Bank of India's CP maturing Wednesday was traded twice at a weighted average yield of 5.19%

 

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
Tuesday	Monday	Tuesday	Monday
68.65	133.90	55.40	46.55

 

 

End

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

 

Edited by Saji George Titus

 

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