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Informist, Monday, Oct. 5, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit and commercial papers fell by around five basis points in key tenors in the secondary market Monday at the start of the new quarter, while primary market activity remained subdued as market participants adopted a wait-and-watch approach ahead of the Reserve Bank of India's Monetary Policy Committee meeting, dealers said.

 

Yields on AAA-rated three-month CDs were at 6.45-6.50%, down from 6.50-6.55% Thursday, while six-month CD yields were quoted at 7.10-7.20%, down from 7.20-7.25%. One-year CD yields were at 7.50-7.55%, compared with 7.55-7.60% Thursday. February-March maturities were the most actively traded segments in the CD market.

 

"People are not confident enough to come up with new issuances ahead of the MPC meeting, so up until then they are in a wait-and-watch mode and won't come up with any major issuances," a dealer in a brokerage said.

 

The cautious sentiment ahead of the RBI policy has kept issuers and investors from taking large positions, particularly as market participants expect the central bank to raise the policy repo rate by 25 basis points on Wednesday. Dealers said banks are also closely monitoring liquidity conditions and their funding requirements at the beginning of the new quarter.

 

Yields on three-month AAA-rated non-banking finance company CPs were at 7.10-7.15%, compared with 7.20-7.25% Thursday, while six-month yields were around 7.45%, down from 7.50%. One-year yields were at 7.85-7.90%, compared with around 7.90% Thursday. Activity remained subdued in both the primary and secondary CP markets.

 

The net liquidity absorbed by the RBI – a proxy for the banking system liquidity surplus – was at INR 5.16 trillion on Sunday, against INR 5.17 trillion on Saturday and INR 4.45 trillion on Friday. The liquidity surplus rose due to month-end inflows from salaries and pensions, and as banks also withdrew excess cash balances from the RBI.

 

"Banks are cautious now because they are expecting the RBI to hike the (repo) rate by 25 bps in the MPC," a dealer at a state-owned bank said.

 

Despite ample liquidity in the banking system and a fall in the secondary-market yields, the primary market remained subdued ahead of the MPC meet. Primary CD issuances were INR 34.00 billion on Monday, up from INR 19.80 billion on Thursday, according to data from Clearing Corp. of India. DCB Bank, Indian Bank, Union Bank of India, and Karur Vysya Bank tapped the market Monday, with Union Bank raising INR 16.00 billion through a 90-day paper at a weighted average yield of 6.53%.

 

Indian Bank raised INR 8 billion through an 87-day CD at a weighted average yield of 6.48%, while DCB Bank and Karur Vysya Bank raised INR 5 billion each at weighted average yields of 6.74% and 6.70%, respectively.

 

In the primary CP market, issuances rose to INR 52.80 billion from INR 19.80 billion Thursday, according to data from Clearing Corp. of India. L&T Finance, Chennai Petroleum Corp., Godrej Consumer Products, and Bajaj Finance issued CPs.

 

L&T Finance raised a total of INR 27.60 billion through four CPs at weighted average yields of 6.50?ch, while Chennai Petroleum Corp. raised INR 10 billion through a 29-day CP at a weighted average yield of 5.95%. Godrej Consumer Products raised INR 6 billion through a 30-day CP at 6.20%, while Bajaj Finance raised INR 4.5 billion through 46- and 49-day CPs at 6.75?ch.

 

In the secondary market, CD volume rose sharply to INR 73.80 billion from INR 43.85 billion Thursday, while CP volumes fell to INR 14.80 billion from INR 21.90 billion.

 

--Primary market

* DCB Bank, Indian Bank, Union Bank of India, and Karur Vysya Bank issued CDs Monday.

* L&T Finance, Chennai Petroleum Corp., Godrej Consumer Products, and Bajaj Finance issued CPs Monday.  

 

--Secondary market

* Union Bank of India's CD maturing Oct. 12 was traded once at a weighted average yield of 5.75%.
* Bajaj Finance's CP maturing Oct. 16 was traded twice at a weighted average yield of 6.40%.

 

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
Monday	Thursday	Monday	Thursday
73.80	43.85	14.80	21.90

 

End

 

Edited by Saji George Titus

 

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