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Informist, Monday, Jun. 29, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on commercial papers and certificates of deposit fell marginally across tenures Monday, driven by strong demand from mutual funds. Dealers said participants expect fewer issuances of short-term debt instruments in forthcoming weeks as liquidity is expected to return to the banking system. "Everybody is expecting less supply of these instruments (CP and CD), so a few mutual funds and other investors are buying them not just to meet funding needs but to add the papers to their portfolios which pushed yields lower," a dealer at a brokerage firm said. 

 

Dealers said liquidity will return to the system as the government's month-end spending has already started, adding funds into the banking system. There will also be less demand for funds from mutual funds, banks, and non-bank lenders, which should lead to lower issuances.

 

Yields on AAA-rated three-month CDs fell to 6.50-6.52% Monday from 6.56-6.60% Thursday, while those on one-year papers fell to 6.85-7.95% from 7.02-7.08%, dealers said. Yields on three-month AAA-rated papers issued by non-banking financial companies fell marginally from the previous day to 6.80-6.82%. Yields on six-month and one-year commercial papers were down marginally at 7.25-7.40% and 7.50-7.65%, respectively. Friday, the Indian money market was shut on account of Muharram.

 

In the secondary market, CD trading volume rose marginally, but it remained on the lower side amid a liquidity deficit in the banking system, dealers said. Overall trading volume was at INR 76.15 billion compared to INR 70.95 billion Thursday, according to Clearing Corp. of India Ltd. data at 1810 IST. On the commercial paper side, trading volume slumped to INR 22.00 billion Monday from 46.25 billion Thursday. 

 

The net liquidity injected by the RBI into the banking system--a proxy for the systemic liquidity deficit--was INR 415.63 billion Sunday, slightly up from INR 407.88 billion Saturday, and a tad lower from INR 426.69 billion Friday.

 

Meanwhile, fundraising through CDs in the primary market rose. Issuances of CDs fell to INR 70.50 billion Monday from 45.50 billion Thursday, according to data from Clearing Corp. Bank of India, HDFC Bank, Punjab National Bank, IndusInd Bank, CSB Bank, Canara Bank and Ujjivan Small Finance Bank tapped the market for funds Monday. Canara Bank was the largest issuer and raised INR 32 billion via 153-day CD at a weighted average yield of 6.88%. Punjab National Bank borrowed INR 10 billion at 6.20% via 30-day CD. HDFC Bank raised INR 9 billion, Bank of India mopped up INR 12.50 billion via two CD of different maturities. 

 

Market participants said several other banks tried to raise funds through CD, but some deals fell through because they could not get the rates they were comfortable with. To meet month-end funding needs and support credit offtake, some banks tapped the call money market instead. "Some banks turned to the call money market for funds to meet disbursal requirements same as last week," the dealer quoted above said. 

 

Commercial papers aggregating to INR 35.95 billion were issued Monday, slumping from INR 108.90 billion Thursday. Large issuers included Hindustan Petroleum, Tata Communications, SBICAP Securities, Tata Capital, IIFL Finance, and Jio Credit. Hindustan Petroleum raised INR 10 billion via 88-day CP at a weighted average yield of 6.77%, while Axis Securities raised INR 5 billion via 89-day CP at a weighted average yield of 6.90%.  

 

--Primary market
* Bank of India, HDFC Bank, Punjab National Bank, IndusInd Bank, CSB Bank, Canara Bank and Ujjivan Small Finance Bank were the CD issuers. 

* Hindustan Petroleum, Tata Communications, SBICAP Securities, Tata Capital, IIFL Finance, and Jio Credit were the major issuers of CPs. 

 

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded five times at a weighted average yield of 5.60%
* HDFC Securites' CP maturing Wednesday was traded once at a weighted average yield of 6.35%

 

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
76.15	72.20	22.00	46.50

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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