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Informist, Tuesday, Jul. 7, 2026

 

By Meera Nair

 

MUMBAI – Yields on commercial papers and certificates of deposit rose by 15–20 basis points across most tenors in the secondary market Tuesday as interest from buyers fell after demand eased, while mutual funds stepped up selling to meet redemption pressure, dealers said.

 

The rise in yields came despite surplus liquidity in the banking system, indicating that the move was largely flow-driven rather than overall liquidity conditions. The net liquidity absorbed by the Reserve Bank of India, a proxy for surplus liquidity in the banking system, stood at INR 1.19 trillion Monday, compared with INR 1.85 trillion on Sunday.

 

Yields on three-month AAA-rated certificates of deposit rose 15-20 basis points to 6.40-6.50% from 6.25-6.30% on Monday. Yields on six-month papers climbed 20 bps to 6.75-6.80% from 6.55-6.60%, while one-year yields also rose by 10 bps to 7.05-7.10% from 6.95-7.00%. "More activity was seen in the JFM (January-February-March) segment and mutual funds were aggressively selling there because of redemption pressure," a dealer from a brokerage firm said.

 

Another dealer at a private sector bank said the rise in yields appeared inconsistent with current liquidity conditions. "I assume there might be pressure from some specific asset classes. Otherwise, I don't see any specific reason for yields to go up in July, especially when liquidity is comfortable," the dealer said.
 

In the secondary commercial paper market, yields on three-month AAA-rated papers issued by non-banking finance companies rose 15 basis points to 6.90-6.95% from 6.75-6.80% on Monday. Six-month paper yields were at 7.10-7.20%, while one-year CP yields were at 7.50–7.60%.  

 

Certificate of deposit turnover fell to INR 103.85 billion as of 1702 IST from INR 157.20 billion on Monday, according to data from the Clearing Corp. of India Ltd. Commercial paper turnover also dropped to INR 46.25 billion at 1712 IST from INR 62.50 billion Monday.

 

Trading volumes in the secondary market also declined as participants largely stayed on the sidelines after the recent sharp rally in money market instruments, dealers said. With liquidity remaining comfortable and yields moving higher on portfolio needs rather than fresh fundamental triggers, most investors refrained from adding positions and preferred to wait for yields to stabilise before entering the market.

 

Primary market issuances also declined on Tuesday. As of 1714 IST, issuance of CDs fell to INR 43.50 billion from INR 67.00 billion on Monday. Indian Overseas Bank, UCO Bank, Indian Bank, and Central Bank of India were the only issuers Tuesday. Indian Overseas Bank raised INR 15.00 billion through 85-day paper at a weighted-average yield of 6.42%, while UCO Bank raised INR 11.00 billion through 342-day CD at a weighted-average yield of 7.15%. Indian Bank raised INR 9.00 billion through 85-day papers at 6.21% and Central Bank of India raised INR 8.50 billion at 6.18%.  

 

As of 1725 IST, commercial paper issuances fell sharply to INR 70.23 billion from INR 269.83 billion on Monday, after the heavy fundraising at the start of the new quarter subsided. Major issuers included Bharat Petroleum Corp., Indian Oil Corp., IIFL Finance, ICICI Securities, and Can Fin Homes. BPCL raised INR 35.00 billion through 28-day papers at a weighted average yield of 6.05%. Indian Oil raised INR 12.00 billion through 76-day papers at 6.10%, while Can Fin Homes raised INR 5.00 billion through 77-day papers at 6.30%. ICICI Securities raised INR 3.25 billion through 111-day commercial papers at a weighted average yield of 6.80%. 

--Primary market
* Indian Overseas Bank, UCO Bank, Indian Bank, and Central Bank of India issued CDs Tuesday.   

* Bharat Petroleum Corp., Indian Oil Corp., IIFL Finance, ICICI Securities, and Can Fin Homes issuerd CPs Tuesday.

 

--Secondary market

* Union Bank's CD maturing on Jul. 23 was traded once at a weighted average yield of 6.15%
* Bajaj Finance's CP maturing Wednesday was traded once 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
Tuesday	Monday	Tuesday	Monday
103.85	157.20	46.25	62.50

 

End

 

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

 

Edited by Saji George Titus

 

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