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Informist, Friday, Jun. 5, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit and commercial paper fell sharply for most tenures Friday as traders assessed the Reserve Bank of India Governor Sanjay Malhotra's comments on liquidity, dealers said. Malhotra said the central bank will actively manage liquidity to support economic needs, dealers added. 

 

"The Reserve Bank would ensure appropriate liquidity in the banking system to meet the productive requirements of the economy," he said, adding that money market conditions have remained stable. "Since the April meeting, the weighted average call rate traded within the policy corridor," the governor said. 

 

The RBI absorbed a net INR 1.89 trillion from the banking system on Thursday, compared with INR 1.71 trillion on Wednesday, indicating continued surplus liquidity. Liquidity conditions improved as banks' cash balances with the RBI declined to INR 7.90 trillion from INR 8.01 trillion a day earlier.

 

Friday, the MPC decided to keep key policy rates unchanged, with the repo rate at 5.25%. Market participants also said the RBI's decision and commentary were largely in line with expectations, but it gave more clarity on the policy outlook which will help them prepare for future moves. However, the timing of any rate hike will still depend on how growth and inflation play out.

 

Yields on AAA-rated public sector undertaking CD with three-month and six-month maturities fell by 10 basis points from Thursday, while one-year CD yields were largely unchanged. Three-month CD yields were at 7.10-7.15%, down from 7.20-7.25% Thursday. Six-month yields fell to 7.55-7.60% from 7.65-7.70%. One-year yields were at 7.85-7.90%. The three-month segment remained the most actively traded tenor in the secondary market.

 

Dealers expect short-term yields to stay under pressure in the near term, driven by surplus liquidity and higher supply of instruments in the primary market during June. However, tax-related outflows later in the month could tighten liquidity temporarily and limit further decline in rates.

 

Issuance of CDs stood at INR 44.50 billion as of 1847 IST Friday, sharply lower than INR 145.50 billion Thursday, according to data from Clearing Corp of India. Among issuers, Bank of Baroda raised INR 20.50 billion through 91-day CD at a weighted average yield of 7.23%, while Union Bank of India raised INR 14.50 billion at 7.09% through same maturity CD. HDFC Bank raised INR 6.00 billion through the same maturity CD at 7.14%. Indian Bank raised INR 3.50 billion through 91-day CD at a weighted average yield of 7.20%. 

 

On the CP side, yields on three-month AAA-rated and one-year papers issued by non-banking financial companies eased, while those on six-month papers were steady. Three-month CP yields were at 7.75-7.80% Friday, down 10 bps from 7.85-7.90% Thursday. Six-month CP yields were unchanged at 8.00-8.05% and those on one-year CP were at 8.05-8.10%, down 5 bps from 8.10-8.20%, respectively. "The commentary was hawkish by RBI and they are also in wait-and-watch mode," a dealer at a brokerage firm said.

 

Commercial paper issuance totalled INR 141.42 billion as of 1851 IST, compared with INR 173.46 billion Thursday. Major issuers included National Bank for Agriculture and Rural Development, Reliance Retail Ventures, Tata Steel, ICICI Securities, Kotak Securities, IIFL Finance and Bajaj Finance.

 

NABARD raised INR 25 billion at a weighted average yield of 7.40% through 91-day CP, while Reliance Retail Ventures raised INR 21 billion at 7.32%. Tata Steel raised INR 19 billion at 7.42%, and ICICI Securities raised INR 10.60 billion at 8.11%.

 

In the secondary market, CDs worth INR 120.45 billion were traded on Friday, down from INR 134.95 billion on Thursday, according to CCIL data. Commercial paper trading volumes also declined to INR 58.45 billion from INR 99.65 billion.

 

--Primary market
* Bank of Baroda, Union Bank of India, HDFC Bank, and Indian Bank raised funds via CDs

* NABARD, Reliance Retail Ventures, Tata Steel, ICICI Securities, Kotak Securities, IIFL Finance, and Bajaj Finance were among those that raised funds via CPs. 

 

--Secondary market

* HDFC Bank Ltd.'s CD maturing Wednesday was traded once at a weighted average yield of 6.04%
* REC Ltd.'s CP maturing Wednesday was traded once at a weighted average yield of 5.81%

 

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
116.95	134.70	58.45	99.65

   

End

 

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

 

With inputs from Vaishali Tyagi

Edited by Deepshikha Bhardwaj

 

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