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Informist, Friday, Sept. 25, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit and commercial papers rose across key tenors Friday as end-December papers were repriced ahead of the quarter-end, dealers said. There was no supply of December-end papers, while a cash crunch also pushed yields higher, they said.

 

AAA-rated three-month CDs were quoted at 6.25-6.30%, up 15 basis points from 6.10-6.15% in the previous session, while yields on six-month CDs rose to 6.85-6.90% from 6.80-6.85%. There were no trades in the one-year segment.

 

Yields on three-month CPs issued by AAA-rated non-banking finance companies were at 6.95-7.00%, up from 6.90-6.95% Thursday, while six-month CP yields were unchanged at 7.25-7.30%. There were no trades in one-year CPs.

 

"Union Bank issued three CDs, which mainly moved both CD and CP yields today (Friday), and levels are already high because of expectations of a rate hike at the next MPC (Monetary Policy Committee) meeting," a dealer from a brokerage firm said.

 

"PSU (public sector undertakings) banks came to the CD market after so long, and Union Bank said they came to meet their specific requirements. Apart from that, private banks came with more issuances this week," the dealer said.

 

The dealer said there was more buying interest in longer-term CDs, but issuances were limited. Most issuances were concentrated in papers of up to six months as there was little clarity and more volatility in the market.

 

The RBI's net liquidity absorbed – a proxy for the liquidity surplus in the banking system – was INR 4.27 trillion Thursday, down from INR 4.34 trillion Wednesday, as banks increased their cash balances with the RBI to INR 8.20 trillion Thursday from INR 8.11 trillion the previous day.

 

Systemic liquidity is set to get an early boost after the Centre Wednesday said it would pay salaries and pensions Friday, advancing its expenditure from the end of the month due to a three-day bank strike starting Monday.

 

At Friday's three-day INR 1.50-trillion variable rate reverse repo auction, the RBI accepted all offers amounting to INR 902.80 billion. With government spending brought forward this month and liquidity at more than 1% of net demand and time liabilities, the RBI will continue with daily reverse repo operations to keep the weighted average call rate near the policy rate, dealers said.  

 

Primary issuances in the commercial paper market rose to INR 61.21 billion Friday from INR 39.55 billion Thursday, according to Clearing Corp. of India Ltd. data. National Bank for Agriculture and Rural Development, Can Fin Homes, Tata Capital, Balkrishna Industries, and Arvesta Financial Services were among the issuers.

 

NABARD raised INR 30 billion through a 28-day CP at a weighted average yield of 5.65%, while Can Fin Homes raised INR 5 billion through an 89-day CP at 6.30%. Tata Capital raised INR 4.75 billion through an 81-day CP at 6.80%, while Balkrishna Industries raised INR 2 billion through a 90-day CP at a weighted average yield of 6.33%. Arvesta Financial Services raised INR 2.3 billion at 7.00%.

 

"CP issuances were low as issuers were not comfortable with the current levels, and mutual funds did not have enough buying interest in NBFCs (non-banking financial companies)," a dealer at a brokerage said. NBFCs were finding it harder to raise CPs Friday, the dealer said.

 

In the CD market, primary issuances rose to INR 113.25 billion from INR 85.05 billion Thursday, with Union Bank of India, Federal Bank, Canara Bank and Ujjivan Small Finance Bank tapping the market.

 

Union Bank of India raised a total of INR 55 billion through three CDs at weighted average yields of 6.27%, 6.30% and 6.85%, respectively. Federal Bank raised INR 29 billion through two CDs at weighted average yields of 6.35?ch, while Canara Bank raised INR 28.25 billion through a 30-day CD at 5.90%.

 

In the secondary market, CD volumes fell to INR 82.35 billion from INR 89.40 billion Thursday, while CP volumes fell to INR 52.10 billion from INR 80.08 billion.

 

Commenting on the repricing, a dealer from a public-sector bank said the rise in yields was not just due to the quarter-end, but also reflected the bank strike next week and the term premium.

 

Looking ahead to next week, the dealer from the brokerage firm said the market would remain volatile, but yields would likely stay rangebound.

  

--Primary market

* Union Bank of India, Federal Bank, Canara Bank, and Ujjivan Small Finance Bank issued CDs Friday.

* NABARD, Can Fin Homes, Tata Capital, Balkrishna Industries, and Arvesta Financial Services issued CPs Friday.  

 

--Secondary market

* DBS Bank India's CD maturing Monday was traded three times at a weighted average yield of 5.22%.
* Small Industries Development Bank of India's CP maturing Monday was traded six times at a weighted average yield of 5.20%.

 

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
82.35	89.40	52.10	80.08

 

 

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

 

Edited by Saji George Titus

 

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