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Informist, Tuesday, Oct. 6, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit were mixed across key tenors Tuesday ahead of the outcome of the Reserve Bank of India's Monetary Policy Committee meeting, and commercial paper yields also moved in different directions across sectors, dealers said. Market participants remained cautious ahead of the policy decision and the upcoming festive season, with uncertainty about the sustainability of surplus liquidity prompting them to stay in a wait-and-watch mode, dealers said.

 

Yields on AAA-rated three-month CDs were at 6.50-6.55%, compared with 6.45-6.50% Monday, while six-month CD yields were quoted at 7.00-7.05%, compared with 7.10-7.20% Monday. One-year CD yields were at 7.50-7.55%, compared with 7.55-7.60% Monday. January-February-March maturities were the most actively traded segments in the CD market.

 

"Over the last two months, banks have not been very keen on issuing CDs in longer tenors because FCNR(B) (Foreign Currency Non-Resident (Bank)) deposit rates were lower than CD rates, while banks were also sitting on surplus cash. In the three-month segment, there were hardly any deposits, which resulted in wider spreads between the three- and six-month segments," a dealer from a public sector bank said.

 

"Market uncertainty also continues over whether the current liquidity levels will sustain. With the festive season approaching, cash withdrawals could rise sharply and reduce liquidity, so participants are in a wait-and-watch mode," the dealer said.

 

The dealer said the money market could see higher volatility following Wednesday's MPC decision, as some participants expect a 50-basis-point increase in the repo rate. The dealer expects yields to rise by around 10-15 basis points across key tenors following the policy meeting.

 

Yields on three-month AAA-rated non-banking finance company CPs were at 7.05-7.10%, compared with 7.10-7.15% Monday, while six-month yields were at 7.50-7.55%, compared with around 7.45% in the previous session. One-year yields were at 7.90-7.95%, compared with 7.85-7.90%. Activity remained subdued in both the primary and secondary CP markets.

 

"In the CP market, participants, especially corporates, are in a wait-and-watch mode for clarity from the RBI. After the policy, issuances are likely to pick up," the dealer said.

 

The RBI's net liquidity absorbed — a proxy for the banking system's liquidity surplus — was at INR 5.30 trillion Monday, up from INR 5.16 trillion Sunday. Liquidity in the banking system improved as banks reduced their cash balances with the RBI to INR 8.10 trillion Monday from INR 8.52 trillion Sunday. 

 

There were no CD issuances. Meanwhile, issuances were also at the lowest in the primary CP market and fell significantly to INR 9.35 billion from 52.80 billion Monday, according to data from Clearing Corp. of India. Kotak Mahindra Prime Ltd., ICICI Home Finance Co. Ltd., and Trust Investment Advisor Pvt. Ltd. were among the key CP issuers.

 

Kotak Mahindra Prime and ICICI Home Finance Co. Ltd. raised INR 4 billion each through 365- and 83-days CPs at weighted average yields of 7.90% and 6.37%, respectively. Trust Investment raised INR 1.05 billion through a 92-day CP at a weighted average yield of 8.75%.

 

In the secondary market, CD volume fell slightly to 71.80 billion from INR 73.80 billion Monday, while CP volumes rose to INR 21.55 billion from INR 14.80 billion.

 

--Primary market

* There were no CD issuers Tuesday.

* Kotak Mahindra Prime Ltd., ICICI Home Finance Co. Ltd., and Trust Investment Advisor Pvt. Ltd., were among the issuers CPs Tuesday.  

 

--Secondary market

* Union Bank of India's CD maturing Oct. 12 was traded once at a weighted average yield of 5.80%.
* Godrej Properties's CP maturing Wednesday was traded twice at a weighted average yield of 5.25%.

 

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
71.80	73.80	21.55	14.80

 

End

 

Edited by Avishek Dutta

 

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