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Informist, Wednesday, Sept. 23, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit were mixed, while those on commercial papers were unchanged across key tenors Wednesday. Mutual funds sold some papers amid redemption pressure, but buying interest and comfortable system liquidity limited movement in yields, dealers said. Market participants were also largely in a wait-and-watch mode ahead of the Reserve Bank of India's monetary policy meeting next month.

 

AAA-rated three-month CDs were quoted at 6.00-6.05%, up from 5.95-6.00% Tuesday, while yields on six-month CDs were unchanged at 6.70-6.75%. One-year CDs were quoted at 7.30-7.35%, down 10 bps from 7.40-7.50% in the previous session. 

 

"As of now, liquidity is in a comfortable position even after all these VRRRs (variable rate reverse repos), but it will definitely tighten and rates will go up because currently rate-hike sentiment is building," a dealer at a public-sector bank said.

 

"Ahead of the RBI's Monetary Policy Committee meeting, the market is already pricing in a possible 50-basis-point rate hike, and this will be more visible in the six-month and one-year segments. There will not be much impact on the three-month segment until liquidity falls below INR 3 trillion," the dealer said.

 

The dealer said banks were receiving INR 11-12 trillion in overseas funding inflows, reducing the need to raise funds through certificates of deposit and resulting in lower-than-expected CD supply. Lower CD supply can support demand for available papers and limit upward pressure on yields, particularly at the shorter end.

 

AAA-rated three-month, six-month, and one-year CPs issued by non-banking finance companies were unchanged from the previous day at 6.80%, 7.10%, and 7.70%, respectively.  

 

The RBI's net liquidity absorption – a proxy for the banking system's liquidity surplus – fell further to INR 4.44 trillion Tuesday from INR 4.92 trillion Monday. The liquidity surplus has steadily fallen from its record high of INR 11.16 trillion seen earlier this month. "As long as liquidity is above INR 3 trillion, there is nothing to worry about and everything will be smooth," the dealer said.

 

"After the policy, one-year CD rates will start moving significantly higher, mostly towards 7.50%," the dealer said. 

 

Primary issuances in the commercial paper market rose sharply to INR 77.84 billion Wednesday from INR 46.84 billion Tuesday, according to Clearing Corp. of India Ltd. data. Export-Import Bank of India, Reliance Retail Ventures, Tata Power Co., NIIF Infrastructure Finance, Redington, and Infina Finance were among the issuers.

 

Exim Bank raised INR 40.00 billion through a 78-day CP at a weighted average yield of 6.00%, while Reliance Retail Ventures raised INR 10.00 billion through a 51-day CP at 6.03%. Tata Power raised INR 5 billion through a 90-day CP at 6.27%, while NIIF Infrastructure Finance raised INR 5 billion through two CPs at 7.30% and 7.11%, respectively.

 

In the CD market, primary issuances fell to INR 74.00 billion from INR 89.00 billion Tuesday, with Union Bank of India, Bank of India, IDBI Bank, HDFC Bank, and Karur Vysya Bank tapping the market.

 

Union Bank of India raised INR 25.25 billion through two CDs at weighted average yields of 5.85% and 6.05%, respectively. Bank of India raised INR 20.25 billion at a weighted average yield of 6.15%, while IDBI Bank raised INR 12.00 billion through a 29-day CD at 5.80%. HDFC Bank raised INR 12.50 billion through 81- and 116-day CDs at weighted average yields of 6.10% and 6.75%, respectively.

 

In the secondary market, CD volumes rose sharply to INR 123.60 billion from INR 101.30 billion Tuesday. CP volumes fell slightly to INR 70.20 billion from INR 74.85 billion Tuesday.
 

--Primary market

* Union Bank of India, Bank of India, IDBI Bank, HDFC Bank, Karur Vysya Bank issued CDs Wednesday.

* Exim Bank, Reliance Retail Ventures, Tata Power, NIIF Infrastructure Finance, Redington, and Infina Finance issued CPs Wednesday.  

 

--Secondary market

* Union Bank of India's CD maturing Thursday was traded six times at a weighted average yield of 5.20%.
* Bharat Petroleum Corp.'s CP maturing Thursday was traded three times at a weighted average yield of 5.17%.

 

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
Wednesday	Tuesday	Wednesday	Tuesday
123.60	101.30	70.20	74.85

 

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

 

Edited by Saji George Titus

 

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