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Informist, Tuesday, Sept. 8, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on short-term debt instruments remained largely unchanged due to low participation amid surplus liquidity in the banking system stayed above INR 10 trillion on Monday, dealers said. No major trades were reported in the secondary market, which led to a marginal fall in volume, and hence rates also remained unchanged, they said.

 

The RBI's net liquidity absorbed--a proxy for the banking system liquidity surplus--was at INR 10.36 trillion Monday, down from INR 11.16 trillion Sunday due to outflows for excise duty and tax deducted at source.

 

"Even though banks and corporates, including NBFCs, are in need of funds, they are using the tri-party repo market market," a dealer at a private sector bank said. "Wherever funding requirements are emerging, participants are tapping the tri-party repo market, which is offering funds at cheaper rates." This management by banks and corporates is keeping short-term issuances on lower side, the dealer said. The tri-party repo rate for one-day loans ended at 4%, sharply below the RBI's floor rate, and down from 4.50% Monday. The weighted average rate in the market was 4.58% Tuesday against 4.59% Monday.

 

In the secondary market, CD market volume was at INR 93.25 billion Tuesday, down from INR 111.75 billion Monday, while CP market volume fell to INR 94.05 billion from INR 114.40 billion.

 

Market participants are unable to take a call or gauge market conditions due to excess liquidity and uncertainty around the Reserve Bank of India's measures to curb it, dealers said. While some traders expect the RBI to continue conducting overnight variable rate reverse repo operations for the rest of the month, others expect measures to drain durable liquidity this month itself.

 

Short-term debt issuances will rise after credit off-take picks up as we approach mid-September as liquidity drains from the system, market participants said. "I think demand for funds is expected to go up, as advance tax outflows will be over INR 2 trillion by mid-September...apart from that, since this quarter-end will also see a pick-up in credit disbursement, that will drain some liquidity," a dealer at a brokerage firm said. 

 

Dealers said CD yields remained unchanged because of low trading in the market. Yields on 'AAA'-rated three-month CDs were at 5.80-5.85% Tuesday, broadly similar to 5.85-5.90% Monday. Yields on six-month CDs were at 6.35-6.40%, unchanged from the previous session, while yields on one-year CDs were at 6.85-9.90%, compared to 6.90-7.10% Monday.

 

Primary activity in the CD market rose to INR 74.75 billion from INR 13.50 billion Monday, according to data from Clearing Corp. of India Ltd. Only five banks issued CDs amid ample liquidity in the system. Bank of Baroda raised INR 31 billion at a weighted average yields of 5.75% through 48-day CD, while Jammu and Kashmir Bank borrowed INR 10 billion at a yield of 6.50% via CD maturing in 91-day. Central Bank of India tapped the CD market to raise INR 24.50 billion. YES Bank and CSB Bank also tapped the CD market to raise INR funds.  

 

In the commercial paper market, primary issuances remained broadly stable compared to the previous session, dealers said. Most CP issuers who had redemptions were issuing only to meet rollover requirements, they said. Primary issuances were at INR 156.09 billion, broadly similar to INR 156.53 billion Monday, according to CCIL data. 

 

Hindustan Petroleum Corp. raised INR 16 billion at a weighted average yield of 5.80% through a 52-day CP, while Indian Oil Corp. raised INR 13.75 billion through a 91-day CP. Other key issuers included Bajaj Financial Securities, JSW Energy, Reliance Retail Ventures, Kotak Securities, Motilal Oswal Financial Services, Ultratech Cement, and IIFL Finance. 

 

--Primary market

* Bank of Baroda, CSB Bank and Jammu and Kashmir Bank issued CDs Tuesday.

* Hindustan Petroleum Corp., Indian Oil Corp., Bajaj Financial Securities, JSW Energy, Reliance Retail Ventures, Kotak Securities, Motilal Oswal Financial Services, Ultratech Cement, and IIFL Finance were among the key CP issuers Tuesday.  

 

--Secondary market

* Canara Bank's CD maturing Wednesday was traded nine times at a weighted average yield of 4.67%.
* National Bank for Agriculture and Rural Development's CP maturing Wednesday was traded seven times at a weighted average yield of 4.68%.

 

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
Tuesday	Monday	Tuesday	Monday
93.25	111.75	94.05	114.40

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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