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Informist, Monday, Jun. 1, 2026

By Meera Nair

MUMBAI – Yields on three-month certificates of deposit and commercial papers fell Monday as government spending boosted liquidity conditions in the banking system and improved market sentiment, dealers said.

"Markets are expecting additional liquidity measures from the Reserve Bank of India, like OMOs (open market operations) or VRRs (variable rate repos)," a dealer at a private-sector bank said. 

Yields on three-month certificates of deposit fell by 5 basis points from Friday, while six-month yields were unchanged and one-year yields rose marginally. Yields on AAA-rated three-month CDs were at 7.15-7.20%, down 5 bps from 7.20-7.25% Friday. Six-month CDs were unchanged at 7.50-7.55%, while one-year yields were at 7.80-7.90%, up 5 basis points from Friday.

"The three-month segment was the most active, while six-month and one-year papers saw limited trading as there was little demand from mutual funds," a dealer at a brokerage firm said. Mutual funds were the buyers and sellers on the secondary market. 

As of 1757 IST, CD issuances totalled INR 128.90 billion, sharply higher than INR 77.00 billion Friday, according to data from the Clearing Corp of India Ltd. "CD issuances rose sharply on Monday as banks stepped up fund-raising to meet their funding requirements, while market participants expect rates to remain broadly stable," the dealer at the brokerage firm said.

The net liquidity absorbed by the RBI--an indication of surplus liquidity--was INR 1.39 trillion, similar to Saturday's surplus and up from INR 1.04 trillion Friday, according to the latest data. Surplus liquidity crossed INR 1 trillion mark on Friday after remaining below that level for eight consecutive days, backed by month-end government spending, dealers said.

Among key issuers, so far Canara Bank has raised INR 24.25 billion by issuing three-month CD at 7.18%, while the lender planned to raise INR 70 billion through multiple three-month certificates of deposit at 7.18% Monday, a dealer at the bank told Informist. Punjab National Bank raised INR 20.15 billion through the same maturity at 7.16%. However, it planned to raise INR 31.65 billion through multiple three-month CDs at 7.16%.

Other issuers included DBS Bank India which raised INR 5 billion through CDs maturing on Aug. 31 at a weighted average yield of 7.35%. Axis Bank and Bank of Baroda also tapped the market, raising INR 29.75 billion and INR 25.50 billion, respectively, across different maturities. IndusInd Bank, Central Bank of India, and Indian Bank also tapped the market.

"In the coming weeks, shorter-tenure yields in both the primary and secondary markets are likely to soften further due to stronger demand, while the outlook for nine-month and one-year papers remains uncertain," the dealer at the private-sector bank said.

On the CP side, three-month yields fell by 5 basis points, while six-month and one-year yields were unchanged from Friday. Yields on AAA-rated CPs issued by non-banking financial companies were at 7.85-7.90%, down 5 bps from 7.90-7.95% Friday. Six-month CP yields were unchanged at 8.00-8.05%, while one-year yields were also steady at 8.10-8.15%.

CP issuances fell to INR 83.47 billion Monday from INR 116.95 billion Friday, according to CCIL data. Key issuers included L&T Metro Rail Hyderabad, Bajaj Housing Finance, Axis Securities, Kotak Securities Ltd., and National Bank for Agriculture and Rural Development. L&T Metro Rail Hyderabad raised INR 8.25 billion through 21-day CP at a weighted average yield of 7.90%, while NABARD raised INR 20 billion through three-month CP at 7.40%. Bajaj Housing Finance raised INR 7.50 billion through papers of similar maturity at a weighted average yield of 7.60%.

In the secondary market, CDs worth INR 106.60 billion were traded as of 1700 IST Monday, down from INR 157.25 billion Friday, according to CCIL data. CP volumes rose to INR 55.10 billion from INR 48.81 billion. "Secondary market CD volumes were lower as participants remained cautious ahead of the RBI's monetary policy decision later this week," a dealer at a brokerage firm said. "Lower participation from mutual funds also weighed on trading activity," a dealer at a brokerage firm said.

--Primary market
* DBS Bank India, Punjab National Bank, Bank of Baroda, Canara Bank, Central Bank of India, Axis Bank, IndusInd Bank, and Indian Bank were the only issuers that raised funds via CDs

* L&T Metro Rail Hyderabad, Bajaj Housing Finance, HDFC Securities, Axis Securities, Kotak Securities, and NABARD were among those that raised funds via CPs

--Secondary market

* HDFC Bank Ltd.'s CD maturing Thursday was traded once at a weighted average yield of 6.13%
* L&T Finance Ltd.'s CP maturing Tuesday was traded once at a weighted average yield of 5.18%

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:

End

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

Edited by Deepshikha Bhardwaj

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