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Informist, Friday, Jul. 17, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit and commercial papers were largely unchanged across key tenors on Friday as corporate flows into mutual funds supported demand despite tighter banking system liquidity, dealers said.

 

The RBI's net liquidity absorbed, a proxy for banking system liquidity surplus, was INR 831.96 billion Thursday, down from INR 1.31 trillion Wednesday, according to latest data. "Liquidity has been tightening since geopolitical tensions escalated. The RBI has been conducting three-day VRR (variable rate repo) auctions to support liquidity, but the market is waiting to see whether it introduces longer-tenor VRRs, such as one- or two-month operations," a dealer from a brokerage firm said. 

 

Three-month AAA-rated certificates of deposit were unchanged from 6.80-6.85% Thursday. Six-month yields eased 5 bps to 6.95-7.00% from 7.00-7.05% Thursday, and one-year yields were unchanged at 7.30-7.35%. Dealers said trading activity was concentrated in September maturities.

 

Yields on commercial papers issued by non-banking finance companies were unchanged across key tenors. Three-month AAA-rated papers were quoted at 7.20-7.25%, six-month papers at 7.40-7.45%, and one-year papers at 7.60-7.65%. 

 

"The recent decline in yields has improved investor confidence and eased redemption pressure on mutual funds. It's still too early to say whether the trend will continue into next week, especially on Monday and Tuesday. Conditions should improve later, provided there are no fresh geopolitical developments," the dealer from the brokerage firm said. 

Primary issuance of commercial papers fell to INR 21.05 billion as of 1724 IST from INR 34.30 billion Thursday. The major issuers were DSP Finance Pvt. Ltd., Redington Ltd., PNB Housing Finance Ltd., Bajaj Financial Securities Ltd., Poonawalla Fincorp Ltd., Arvesta Financial Services Pvt. Ltd. DSP Finance raised INR 2.5 billion through a 69-day commercial paper at a weighted average yield of 7.50%, while Redington Ltd., Bajaj Financial Securities, and PNB Housing Finance Ltd. raised INR 2 billion each through 35- , 35-, and 89- day papers at 7.00%, 6.80%, and 7.10%, respectively. 

 

Primary CD issuance fell to INR 68.50 billion as of 1700 IST from INR 111.50 billion Thursday. Four banks issued CDs on Friday – HDFC Bank raised INR 31.50 billion through two certificates of deposit at a weighted average yield of 6.85?ch, while IDFC FIRST Bank raised INR 20 billion through two issuances at 7.35?ch. Indian Bank raised INR 9.50 billion through 339-day maturity at a weighted average yield of 7.15%, while PNB raised INR 5 billion at 6.25%, according to data from Clearing Corp. of India Ltd.

 

"Issuances in both the markets have been lower over the past few weeks, but we expect fundraising to pick up during the second half of July and increase further in August," the dealer said. 

 

Secondary market turnover in CDs fell to INR 88.40 billion from INR 110.20 billion Thursday, according to CCIL data. Commercial paper turnover dropped to INR 28.00 billion from INR 39.00 billion.

--Primary market
* HDFC Bank, IDFC FIRST Bank, Indian Bank, and Punjab National Bank were the only CD issuers Friday.   

* Redington Ltd., PNB Housing Finance Ltd., Bajaj Financial Securities Ltd., Poonawalla Fincorp Ltd., Arvesta Financial Services Pvt. Ltd., were among the CP issuers Friday.

 

--Secondary market

* Bank of Baroda's CD maturing Monday was traded five times at a weighted average yield of 5.35%
* Bajaj Financial Securities Ltd.'s CP maturing Monday was traded once at a weighted average yield of 5.37%

 

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
88.40	110.20	28.00	39.00

 

End

 

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

 

Edited by Avishek Dutta

 

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