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Informist, Tuesday, Aug. 25, 2026

By Meera Nair

MUMBAI – Yields on six-month certificates of deposit fell 10 basis points Tuesday as investors preferred bank CDs to commercial papers, citing better liquidity in CDs, while ample cash with mutual funds supported demand, dealers said. The fall came amid easing geopolitical concerns after Pakistan said it had made significant progress in efforts to end the US-Iran war.

Six-month CD yields fell to 6.80-6.83% from around 6.90% Monday. However, yields on three-month CDs were unchanged at 6.50-6.55%, while there were no trades in the one-year segment. January-February-March maturities were active in the market. There were no trades in three-month, six-month, and one-year CP issued by AAA-rated non-bank finance companies.

"Investors are showing more preference for bank CDs over CP despite similar yields and tenors, as CDs are more liquid. Mutual funds are also buying as they have surplus cash to deploy at this moment," a dealer at a brokerage firm said.

Secondary-market turnover in CDs fell to INR 118.00 billion from INR 147.15 billion on Monday, according to Clearing Corp. of India Ltd. data. Primary market CD issuances were INR 34.45 billion, down from INR 37.00 billion a day earlier.

Small Industries Development Bank of India raised INR 12.45 billion through one-year paper at a weighted average yield of 7.45%, while Punjab and Sind Bank raised INR 10 billion through a 91-day paper at a weighted average yield of 6.53%. AU Small Finance Bank raised INR 6.5 billion through 153- and 364-day papers at weighted average yields of 7.15% and 7.77%, respectively. Jammu & Kashmir Bank raised INR 5 billion at 6.88%, and Central Bank of India raised INR 500 million at 6.60%.

"More issuances are expected in the coming weeks as FCNR(B) (foreign currency non-resident (bank)) is coming to a close, and the market is also preparing for a liquidity drain in the coming days, which might push rates by 4-5 basis points," the dealer said.

Secondary-market turnover in CPs fell to INR 32.00 billion from INR 58.40 billion a day earlier. However, CP issuances rose sharply to INR 149.52 billion as of 1755 IST from INR 55.40 billion on Monday. 

National Bank for Agriculture and Rural Development raised INR 50 billion through 90-day CPs at a weighted average yield of 6.63%, while REC raised INR 30 billion at 6.55%. Kotak Securities raised INR 15 billion through four CPs at weighted average yields of 6.83% for one and 7.25% for the other three CPs, while HDFC Securities raised INR 11 billion at a weighted average yield of 7.28%.

"The primary CP market was more active than the secondary as participants were getting better rates there because of month-end... and we can expect the same during the first week of September," the dealer said.

The net liquidity absorbed by the RBI — a proxy for liquidity surplus — was INR 3.64 trillion Monday, up from INR 3.40 trillion Sunday. Even as banks were "self-sufficient" for their funding needs amid inflows, demand for initial public offerings and credit disbursements kept overnight lending low, dealers said.

--Primary market 

* SIDBI, Punjab and Sind Bank, AU Small Finance Bank, Jammu and Kashmir Bank, and Central Bank were the CD issuers Tuesday. 

* NABARD, REC, HDFC Securities, Kotak Securities, and Tata Capital Housing Finance were among the CP issuers on Tuesday.

--Secondary market

* DBS Bank India's CD maturing Thursday was traded once at a weighted average yield of 5.07%.
* ICICI Securities' CP maturing Friday was traded once at a weighted average yield of 6.13%.

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:

End

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

Edited by Saji George Titus

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