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Informist, Friday, Aug. 28, 2026

 

By Meera Nair

 

MUMBAI – Yields on three-month commercial papers eased five basis points on Friday as ample liquidity and buying by mutual funds supported demand, while yields on certificates of deposit remained largely steady amid subdued participation, dealers said. Volumes in both markets were lower as market participants remained cautious ahead of Aug. 31, they said.

 

In the commercial paper market, yields on three-month papers issued by AAA-rated non-bank financiers fell to 7.00-7.05% from 7.10% on Thursday, while six-month papers were unchanged at 6.75-6.80%. Yields on one-year papers were around 7.60%. Papers maturing within one month were more active.

 

Yields on AAA-rated three-month CDs were unchanged at 6.35-6.40% from Thursday. Six-month CD yields were also steady at around 6.80%, while one-year CD yields were at 7.20-7.25%. The three-month segment was the most active.

 

"Today the markets stayed away from participation as it's month-end and it's Friday. Also, levels have been more or less the same from Thursday," a dealer from a public-sector bank said.

 

"CD-CP rates are expected to go up by Aug. 31, but by the first of September they will be down," a dealer from a public-sector bank said. "Also, corporates and non-banking financiers are coming to the CP markets for both fresh issuances and rollovers."

 

Secondary-market turnover in CDs fell to INR 103.80 billion Friday from INR 152.85 billion Thursday, according to Clearing Corp. of India Ltd. data. Primary-market CD issuances fell to INR 9.00 billion at 1710 IST from INR 14.80 billion Thursday, with only CSB Bank and DCB Bank issuing CDs. CSB Bank raised a total of INR 5 billion through 60- and 91-day papers at weighted average yields of 7.13% and 7.25%, respectively. DCB Bank raised INR 4 billion through 91-day paper at a weighted average yield of 6.83%.

 

Secondary-market turnover in CPs fell to INR 57.40 billion Friday from INR 88.70 billion Thursday. Primary-market CP issuances fell to INR 89.42 billion as of 1715 IST from INR 122.65 billion Thursday.

 

National Bank for Agriculture and Rural Development raised INR 36.75 billion through 91-day CPs at a weighted average yield of 6.44%. Titan Co. raised INR 10.75 billion through a 90-day paper at 6.65%, while Tata Power Co., Apollo Tyres, and HDFC Securities raised INR 5 billion each through 90-, 32-, and 91-day CPs at weighted average yields of 6.63%, 6.69%, and 7.26%, respectively. HDB Financial Services raised INR 6.75 billion at a weighted average yield of 7.25%. Kotak Securities raised INR 8.75 billion through two CPs at 6.63% and 7.24%.

 

Secondary-market demand for certificates of deposit remained stronger than for commercial papers as investors preferred CDs amid limited demand for CPs and a lesser pool of investors eligible to subscribe to the latter, dealers said. Meanwhile, dealers expect short-term borrowing costs to rise in September if the Reserve Bank of India tightens liquidity through measures such as an incremental cash reserve ratio and as advance tax outflows drain funds from the banking system.

 

"Secondary CDs are more active than the CPs as more demand is seen there and also because companies who can subscribe to CPs are also less," a dealer from a public-sector bank said.

 

The dealer said an incremental cash reserve ratio, if imposed by the Reserve Bank of India, could tighten liquidity in the banking system, potentially pushing up CP and CD issuances and yields as banks and companies face higher funding costs.

 

"As the FCNR (B)(foreign currency non-resident (bank)) is coming to a close, we expect a lot of issuances in September and rates are highly likely to go up as there will be advance tax outflows," a dealer from a brokerage firm said.

 

The Reserve Bank of India said earlier this month that the special swap facility for FCNR(B) deposits will be available only for deposits mobilised till Aug. 31 instead of the earlier announced Sept. 30. Companies are due to pay the second instalment of advance corporate tax by Sept. 15.

 

The RBI's net liquidity absorbed – a proxy for systemic liquidity surplus – was INR 3.75 trillion Thursday, similar to Wednesday.

 

--Primary market 

* DCB Bank and CSB Bank were the only CD issuers Friday. 

* NABARD, Titan Co., Tata Power Co., Kotak Securities, Aditya Birla Capital, Bajaj Housing Finance, Apollo Tyres, and HDFC Securities were among the CP issuers on Friday.

 

--Secondary market

* Canara Bank's CD maturing Monday was traded eight times at a weighted average yield of 5.16%.
* NABARD's CP maturing Monday was traded six times at a weighted average yield of 5.15%.

 

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 papers
Friday	Thursday	Friday	Thursday
103.80	152.85	57.40	88.70

 

End

 

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

 

Edited by Saji George Titus

 

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