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Informist, Friday, Jul. 24, 2026

By Meera Nair

MUMBAI – Yields on certificates of deposit and commercial paper remained high Friday as higher crude oil price and tight banking system liquidity kept sentiment cautious in the short-term debt market, dealers said. Activity also remained subdued, with only the six-month CP segment seeing a slight easing of yields.

Yields on three-month "AAA"-rated certificates of deposit were quoted at 6.85-6.90%, up 5 basis points from 6.80-6.85% Thursday. Six-month CD yields also rose 5 bps to 6.95-7.00% while one-year yields were quoted at 7.15-7.20%. Dealers said most secondary market activity remained concentrated in paper maturing between February and March.

Yields on "AAA"-rated commercial paper issued by non-banking finance companies were largely unchanged across most tenors. Three-month CP yields were quoted at 7.35-7.40%, up 5 bps from Thursday, while six-month yields eased by 5 bps to 7.40-7.45%. One-year CP yields rose by 10 bps to 7.75-7.80%.

"The market is uncertain because crude oil prices have risen and month-end factors are also weighing on liquidity," a dealer at a broking firm said. "This has been a very volatile week for the short-term debt market, with limited trades and subdued activity across most days." The dealer said liquidity conditions are expected to improve in early August as the month-end government spending starts flowing back into the banking system.

Primary issuance of certificates of deposit fell sharply to INR 8.00 billion as of 1707 IST, the lowest daily issuance in July, from INR 88.75 billion Thursday, according to data from Clearing Corp. of India Ltd. IDFC FIRST Bank and Punjab National Bank were the only issuers in the market. IDFC FIRST raised a total of INR 7.50 billion through two issuances at weighted average yields of 7.02% while Punjab National Bank raised INR 500 million through a 66-day CD at 6.80%.

Commercial paper issuance also declined to INR 33.20 billion as of 1710 IST from INR 44.31 billion on Thursday. Among the major issuers, Bajaj Housing Finance Ltd. raised INR 5 billion through an 89-day CP at a weighted average yield of 6.99%. Julius Baer Capital India Pvt. Ltd. raised INR 2.50 billion through a 91-day CP at 7.76% and 360 ONE WAM Ltd. raised INR 2 billion at 8.00%.

Secondary market activity weakened further. CD turnover fell to INR 47.75 billion at 1715 IST from INR 89.35 billion Thursday, according to CCIL data. CP turnover also dropped to INR 7.75 billion from INR 21.85 billion, the lowest level this month. "There will likely be no change in yield levels next week," the dealer said. "They should remain elevated as the market continues to face the same liquidity conditions."

The net absorption of liquidity by the RBI, an indication of the banking system liquidity surplus, rose to INR 571.21 billion Thursday from INR 28.84 billion Wednesday. Banks' cash balances with the RBI fell to INR 7.95 trillion from INR 8.19 trillion a day earlier, below the average daily cash reserve ratio requirement of INR 8.16 trillion for the reporting fortnight ending Jul. 31.

"Liquidity has improved marginally from the previous day, but it remains far below comfortable levels," the dealer said. "We expect conditions to improve once funds from recent issuances are deployed into the system and inflows under the FCNR(B) (foreign currency non-resident (bank)) deposit scheme begin to pick up. That should provide some relief from the current volatility."

--Primary market
* Punjab National Bank and IDFC FIRST Bank were the CD issuers.

* Bajaj Housing Finance Ltd., Julius Baer Capital India Pvt. Ltd., 360 ONE WAM Ltd., Fedbank Financial Services Ltd., Aditya Birla Money Ltd., Axis Securities Ltd., were among the CP issuers.

--Secondary market

* IDFC FIRST Bank Ltd.'s CD maturing Monday was traded two times at a weighted average yield of 5.15%.
* ICICI Securities Ltd.'s CP maturing Aug. 3 was traded once at a weighted average yield of 6.50%.

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1715 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 Rajeev Pai

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