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Informist, Wednesday, Jun. 24, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on certificates of deposit fell marginally Wednesday, driven by positive sentiment across money markets as traders expect the Reserve Bank of India's Monetary Policy Committee to hold the repo rate through 2026, following Governor Sanjay Malhotra's comments earlier in the day, they said. 

 

Dealers said other factors also contributed to the fall in yields and rise in market activity. "Market participation increased after the governor's comments, which eased fears of a rate hike this year. Beyond that, there were several positives for the market today (Wednesday)- higher foreign fund inflows and lower crude prices added to the upbeat sentiment," a dealer at a small finance bank said.

 

Earlier in the day, Malhotra said it was premature to talk about repo rate hikes by the MPC in the coming months. He said that policymakers had made a conscious decision not to signal hikes by keeping the stance at "neutral" in the June monetary policy review. The RBI also remains uncertain about the second-round inflationary impact of the West Asia conflict, calling the rise in prices from the hit to crude oil supply "one-time." Still, the rate-setting panel will stay data dependent. A few traders were expecting the rate-setting panel to hike the policy repo rate by October, but now they do not see any action till the end of 2026.

 

Dealers said banks had already borrowed heavily earlier last week for rollovers and other funding needs. However, they expect lenders to tap the short-term debt market in near term to meet their credit requirement. Banks are also active in the call money market to meet quarter-end credit offtake amid the liquidity deficit. "They raised money in advance, and even if some banks are active, they are raising funds through call money (market). Very few banks were seen in the primary market today," dealers added. Net liquidity injected by the RBI into the banking system — an indicator of liquidity deficit – was INR 148.24 billion Tuesday, down from INR 199.72 billion Monday, according to the latest release.

 

Market participants said, we may see a fall in CD issuances after banks get FCNR(B) inflows. "These (FCNR (B) deposits) have just started and remain low for now, but dealers expect real flows to pick up in the coming two-to-three months. 

 

Yields on 'AAA'-rated three-month CD were at 6.56-6.62% from 6.58-6.65% Tuesday and those on six-month fell to 6.60-6.64% from 6.64-6.68%, and on one-year were at 7.08-7.10%% from 7.14-7.23%, dealers said. Secondary market volumes for certificates of deposit rose Wednesday. In the secondary market, CD trading volume rose to INR 141.90 billion Wednesday from INR 138.10 billion Tuesday, according to Clearing Corp. of India Ltd.

 

In primary market, CD issuances rose to INR 78.25 billion Wednesday from INR 67.00 billion Tuesday, according to data from Clearing Corp. of India Ltd. Union Bank of India, Bank of Baroda, HDFC Bank, Bank of India, and Ujjivan Small Finance Bank tapped the market for funds Wednesday. Union Bank of India raised INR 50 billion via two CD issuances, while Bank of Baroda borrowed INR 15 billion via 29-day CD. HDFC Bank borrowed INR 10 billion through the issuance of 28-day CD, while Ujjivan Small Finance Bank raised INR 750 million through CD. 

 

In the commercial paper market, yields on three-month AAA-rated papers issued by non-banking financial companies were broadly steady from the previous day at 6.86-6.90%. Yields on six-month and one-year commercial papers were steady at 7.48-7.53% and 7.63-7.68%, respectively. Trading volume of CP was at INR 55.60 billion Wednesday, significantly down from 86 billion Tuesday. 

 

Papers aggregating to INR 47.46 billion were issued Wednesday, significantly down from 63.43 billion were issued Tuesday. Issuers included Hindustan Petroleum, Nuvama Wealth and Investment, HDFC Securites, and Godrej Properties, were the major issuers of CP Wednesday. Hindustan Petroleum raised INR 9.50 billion via 90-day CP at a weighted average yield of 6.65%, while Nuvama Wealth and Investment raised INR 1 billion via 86-day CP at a weighted average yield of 8.05%.  

 

Dealers said CP issuances have declined as companies prepare for quarter-end results and rebalance their portfolios. Many brokerages are also focused on asset management strategies right now. New CP issuances may pick up in the next quarter once quarterly results are released by the companies. 

 

--Primary market
* Union Bank of India, Bank of Baroda, HDFC Bank, Bank of India, and Ujjivan Small Finance Bank were the CD issuers. 

* Hindustan Petroleum, Nuvama Wealth and Investment, HDFC Securities, and Godrej Properties, were the major issuers of CP. 

 

--Secondary market

* Bank of India's CD maturing Thursday was traded 11 times at a weighted average yield of 5.29%
* Reliance Industries' CP maturing Thursday was traded twice at a weighted average yield of 5.26%

 

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
141.90	138.10	55.60	86.00

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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