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Informist, Monday, Aug. 10, 2026

 

By Meera Nair

 

MUMBAI – Rates on three-month certificates of deposit fell sharply on Monday, easing 17 basis points as inflows through foreign currency non-resident (bank) deposits improved banking system liquidity, keeping short-term rates under downward pressure, dealers said. However, activity remained muted across most segments as market participants adopted a wait-and-watch approach, expecting rates to soften further in the coming days amid easier liquidity conditions, dealers said.

 

Three-month certificate of deposit yields were quoted at 6.38%, down 17 bps from 6.55-6.60% on Friday. However, yields on six-month papers were unchanged at 6.70-6.75%. There were no trades in the one-year segment as participants continued to favour shorter-tenure papers.

 

Three-month AAA-rated commercial papers issued by non-banking finance companies were quoted at around 6.90-6.95%, down 5 bps from 6.95% on Friday. There were no trades in six-month and one-year commercial papers.

 

"There were more FCNR flows in the market last week. This has helped bring down rates, especially in the shorter tenor. But still participants believe that rates in the three-month segment will come down to 6.30-6.35% levels. I hope it will happen soon as the CD market is already at 6.38%," a dealer from a brokerage firm said.

 

"Even in the CP market, I see a lot of easing to happen, but as of today (Monday), the six-month and one-year segments stayed away from activity as dealers are in wait-and-watch mode amid ample liquidity," the dealer said.

 

Secondary market turnover in certificates of deposit fell to INR 113.45 billion from INR 140.05 billion on Friday, according to Clearing Corp. of India Ltd. data. Primary market CD issuances rose to INR 75.00 billion from INR 16.25 billion a day earlier, with Indian Bank, Karur Vysya Bank, and Small Industries Development Bank of India as issuers. SIDBI raised INR 60.00 billion through a 365-day CD at a weighted average yield of 7.35%, while Indian Bank raised INR 10.00 billion through a 90-day CD at a weighted average yield of 6.40%. Karur Vysya Bank raised INR 5 billion at a weighted average yield of 6.65%.

 

In the commercial paper market, secondary market turnover almost doubled to INR 82.55 billion from INR 43.55 billion on Friday. Fresh issuances fell to INR 38.70 billion as of 1713 IST from INR 99.58 billion a day earlier. L&T Metro Rail Hyderabad, Knowledge Realty Trust, Poonawalla Fincorp, Aditya Birla Housing Finance, Kotak Securities, HDFC Securities, and Tata Projects were among the issuers.

 

L&T Metro Rail Hyderabad raised INR 6 billion through commercial paper maturing on Nov 9 at a weighted average yield of 7.35%. Knowledge Realty Trust, Poonawalla Fincorp, Aditya Birla Housing Finance, and Kotak Securities raised INR 5 billion each at 7.00%, 7.10%, 6.67% and 7.15%, respectively. HDFC Securities raised INR 3 billion through 91-day paper at a weighted average yield of 7.08%, while Tata Projects raised INR 2 billion at 6.95%, according to Clearing Corp. of India data.

 

Dealers said issuances could remain subdued if market participants expect borrowing costs to decline further, as issuers may prefer to wait for better rates. "In the coming days, dealers will closely watch the short segments up to three-month rates, and if rates are coming to their expectations, then we can expect better activity in those segments," the dealer said.

 

The net liquidity absorbed by the RBI, an indicator of the banking system's liquidity surplus, was at INR 3.49 trillion on Sunday, compared with INR 3.50 trillion on Saturday and Friday. Dealers expect the central bank to conduct more variable rate reverse repo auctions until outflows for goods and services tax payments start around Aug. 20 to keep the weighted average call rate near the policy rate. Dealers expect the RBI to conduct overnight or two-day VRRR auctions as market participants prefer shorter-tenure reverse repo auctions over longer-tenure ones.

 

--Primary market 

*Indian Bank, Karur Vysya Bank, and Small Industries Development Bank of India issued CDs Monday.

* L&T Metro Rail Hyderabad, Knowledge Realty Trust, Poonawalla Fincorp, Aditya Birla Housing Finance, Kotak Securities, HDFC Securities, and Tata Projects were among CP issuers Monday.

 

--Secondary market

* Axis Bank's CD maturing Tuesday was traded three times at a weighted average yield of 5.14%.
* Bajaj Finance's CP maturing Tuesday was traded twice at a weighted average yield of 5.13%.

 

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
Monday	Friday	Monday	Friday
113.45	140.05	82.55	43.55

 

End

 

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

 

Edited by Saji George Titus

 

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