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Informist, Friday, Sept. 4, 2026

 

By Vaishali Tyagi 

 

NEW DELHI – Fundraising through certificates of deposit fell Friday as issuers refrained from borrowing ahead of the weekend, dealers said. Low funding needs and the huge surplus liquidity in the banking system also contributed to the fall in issuances, they said. 

 

When there is high liquidity in the system, funding needs are low and hardly any issuer comes to the market as banks have enough liquidity to meet their requirements. Further, the tri-party repo rate fell sharply on Friday, which prompted banks that needed funds to raise money from that market instead of issuing short-term maturity CDs, a dealer at a brokerage firm said. The three-day tri-party repo rate opened at 4.60% Friday, well below the RBI's Liquidity Adjustment Facility Corridor with the Standing Deposit Facility rate of 5.00% at its base and touched a low of 3.00%. 

 

"Mutual funds with excess liquidity showed interest in buying CDs, but the offered rates were not that lucrative for them, which also kept yields in a range. Also, it is a Friday, which generally sees active trades in very short-term maturity paper and the quantum is also generally low," he said. The RBI's net liquidity absorption--a proxy for the banking system liquidity surplus--surged to INR 10.31 trillion on Thursday, dealers said.

 

Dealers said if liquidity remains this high, CD issuances by banks will remain low as there is lack of demand for funds amid excessive surplus liquidity.

 

Primary activity in the CD market fell to INR 58.50 billion through certificates of deposit Friday, down more than half from INR 140 billion on Thursday, according to data on Clearing Corp. of India Ltd. Only two banks issued CD in the primary market. Bank of Baroda issued 3 papers to raise a total of INR 53.50 billion, while Karur Vysya Bank borrowed INR 5 billion via CD maturing in 91 days. 

 

Dealers said yields on CD remained unchanged due to low trades in the market. Yields on "AAA"-rated three-month CDs were at 5.80-5.85%, compared to 5.80-5.90% Thursday. Yields on six-month CDs were at 6.35-6.45%, broadly similar to 6.30-6.35% Thursday, while yields on one-year CDs were at 6.80-60.90%.

 

In the commercial paper market, primary issuances grew from the previous session as several non-banking financial companies tapped the short-term debt market to meet their rollover requirements, dealers said. Primary issuances rose to INR 239.39 billion from INR 76.88 billion Thursday, according to CCIL data. Hindustan Petroleum raised INR 22.25 billion at a weighted average yield of 6.12% via 90-day CP, while L&T Finance raised INR 22 billion via two different CPs. Other key issuers included HDFC Securities, Kotak Securities, Godrej Properties, Bajaj Housing Finance, Titan Co., PNB Housing Finance, and DSP Finance. 

 

Yields on "AAA"-rated three-month CPs issued by non-banking financial companies were at 6.50-6.60% Friday compared to 6.60-6.70% Thursday. Yields on six-month CPs were at 6.90-7.05%, unchanged from 7.00-7.10% Thursday. 

 

In the secondary market, CD market volume was at INR 139.40 billion Friday, broadly similar to INR 134.47 billion Thursday, while CP market volume rose to INR 105.90 billion from INR 99.15 billion. 

 

--Primary market

* Bank of Baroda and Karur Vysya Bank were among the key CD issuers Friday.

* Hindustan Petroleum, L&T Finance, HDFC Securities, Kotak Securities, Godrej Properties, Bajaj Housing Finance, Titan Co., PNB Housing Finance, and DSP Finance were among the key CP issuers Friday. 

 

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded once at a weighted average yield of 5.00%.
* Export-Import Bank of India's CP maturing Monday was traded four times at a weighted average yield of 4.38%.

 

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
139.40	134.47	105.90	99.15

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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