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Informist, Friday, Jun. 19, 2026

 

By Vaishali Tyagi 

 

NEW DELHI – Funds raised through certificates of deposit fell sharply Friday ahead of the weekend. Banks had already borrowed heavily earlier this week to meet rollovers and other funding needs, dealers said. They also raised money in advance, anticipating tighter liquidity from goods and services tax outflows starting Saturday--which are expected to drain cash from the banking system--pushing up rates in the short-term debt market, dealers added.

 

The net liquidity absorbed by the RBI--an indication of surplus liquidity in the banking system--was INR 191.63 billion Thursday, sharply up from INR 47.71 billion Wednesday, according to the latest data. Traders had initially pegged total GST outflows to drain around INR 1.8 trillion from the banking system. 

 

Howeever, a section of dealers do not expect the issuances to rise further as most banks have already rolled over their upcoming maturities and front-loaded funds. Now, most banks will look to sit tight ahead of the June quarter-end, dealers said. 

 

"CD issuances picked up early this week as rates fell from previous week after RBI policy and liquidity stayed comfortable, giving issuers room to raise funds at attractive levels before liquidity crunch they expect due to GST outlfows," a dealer at a brokerage firm said. "Most banks had already met their requirements. Going forward, we expect CD issuances to stay broadly lower," a dealer at a brokerage firm said.

 

Primary market CD issuances halved to INR 28.75 billion by 1806 IST from INR 57.50 billion on Thursday, according to data from Clearing Corp. of India Ltd. Union Bank of India, CSB Bank, Bank of India, DBS Bank, and Punjab National Bank tapped the market for funds Friday. DBS Bank raised INR 10 billion at a weighted average yield of 6.80% via 91-day CD, while Bank of India borrowed INR 8 billion through the issuance of same maturity CD at 6.60%. Punjab National Bank raised INR 5 billion through an 88-day CD, while Union Bank borrowed INR 5 billion through 91-day CD at a weighted average yield of 6.60% and 6.59%, respectively. 

 

Due to the limited participation from banks, the yields on CD remained broadly unchanged from Thursday across tenures in the secondary market. Yields on three-month tenure CD papers were at 6.60-6.65% Friday from 6.65-6.70% Thursday, rates on six-month CD paper were 7.15-7.25%, and those on the one-year paper stood at 7.30-7.40%.

 

Meanwhile, commercial paper issuance surged Friday to INR 150.56 billion from INR 98.08 billion as of 1734 IST. Issuers included Hindustan Petroleum Corp., Reliance Retail Ventures, Bajaj Finance, Grasim Industries, and Birla Group Holding were the major issuers of CP Friday. 

 

Hindustan Petroleum Corp. raised INR 15.25 billion through a 90-day CP at a weighted average yield of 6.65%, while Reliance Retails Ventures borrowed INR 26 billion at a weighted average yield of 6.69% by issuing a 91-day CP. Bajaj Finance issued INR 10 billion, Grasim Industries borrowed INR 8 billion, and Birla Group holding mopped up INR 3.5 billion. 

 

Yields on AAA-rated papers issued by non-banking financial companies fell marginally by 5 basis points in the three-month segment, while six-month and one-year yields were unchanged. Three-month CP yields eased to 6.85-6.90% from 6.90-6.95% on Thursday. Six-month and one-year yields were steady at 7.48-7.55% and 7.65-7.70%, respectively. 

 

Most deals were in three-month CPs. Issuers preferred that tenor since mutual funds showed strong demand for it to park money in their liquid schemes, dealers said. "Very short-end papers were in demand from mutual funds, as they were actively investing in CPs of three-month tenure to manage folios," the dealer quoted above said.  

 

In the secondary market, CD trading volume fell to INR 121.50 billion on Friday from INR 156.40 billion on Thursday, according to CCIL data. CP trading volume increased to INR 144.53 billion from INR 129.45 billion.

 

--Primary market
* DBS Bank, Union Bank of India, Bank of India, CSB Bank, and Punjab National Bank were the CD issuers. 

* Hindustan Petroleum Corp., Reliance Retail Ventures, Bajaj Finance, Grasim Industries, Vedanta Power, Motilal Oswal Financial, and Birla Group Holding were the major issuers of CP Friday. 

 

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded twice at a weighted average yield of 6.21%
* Reliance Retail Ventures's CP maturing Monday was traded eight times at a weighted average yield of 5.28%

 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1811 IST, as detailed on CCIL's F-TRAC platform:

 

Certificates of deposit		Commercial paper
Friday	Thursday	Friday	Thursday
121.50	156.40	144.53	129.45

 

 

Edited by Akul Nishant Akhoury

 

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