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Informist, Thursday, Jul. 30, 2026

By J. Navya Sruthi

MUMBAI – Yields on three-month certificates of deposit rose slightly Thursday due to more supply in the segment, dealers said. Yields on the over three-month CD and commercial papers were steady from the previous day due to lack of fresh cues, they said. Volume in the secondary CD market fell sharply as investors stayed sideways ahead of month-end, dealers said. 

"If we see supply in up to three-month segment has increased in recent days, Union Bank has been issuing CD almost every day, which has pushed up yields on up to three-month CD by 5-7 bps (basis points)," a dealer at a state-owned bank said. Yields on "AAA"-rated three-month CD were up by five basis points at 6.85-6.90% Thursday from 6.80-6.85% Wednesday, dealers said. 

Yields on six-month and indicative yields one-year "AAA"-rated CD were unchanged at 6.90-6.95% and 7.10-7.15%, respectively. Yields on "AAA"-rated non-banking finance company's three-month CPs were unchanged from Wednesday at 7.20-7.25%, dealers said. There was no trade in the six-month and one-year "AAA"-rated CP segment issued by non-banking finance companies Thursday.

CD turnover fell to INR 21.00 billion as of 1805 IST Thursday from INR 85.75 billion Wednesday, according to CCIL data. Most dealers attributed this fall to the usual drop in trading ahead of month-end and a rise in liquidity in the banking system. The Reserve Bank of India's net liquidity absorbed--a proxy for the systemic liquidity surplus--was INR 1.16 trillion Wednesday, up from INR 1.07 trillion Tuesday as banks reduced cash balances with the RBI. 

However, despite the rise in banking system liquidity, primary CD issuances rose to INR 22.45 billion as of 1805 IST Thursday from INR 17.85 billion Wednesday, according to data from Clearing Corp. of India Ltd. "Demand for funds for credit disbursements have pushed banks to borrow more from CDs," the dealer mentioned above said. 

HDFC Bank raised INR 5.50 billion through a 91-day CD at 6.88% Thursday, according to CCIL data. Union Bank of India raised INR 14.45 billion through certificates of deposit with three different maturities. 

Meanwhile, issuance of commercial papers fell to INR 24.30 billion as of 1805 IST Thursday from INR 89.75 billion Wednesday. CP turnover rose to INR 23.00 billion from INR 15.85 billion.

For Friday, dealers expect yields on CD and CPs to inch up slightly, tracking the overnight rate in the tri-party repo market. The tri-party repo rate for one-day loans rose to an intraday high of 5.48% due to demand for funds from some banks to meet month-end credit disbursements. The weighted average rate of the tri-party repo market was 5.27%, sharply up from 5.14% Wednesday. 

"There might be some spill-over effect of today's (Thursday) TREPs (tri-party repo) rate (on money market yields on Friday) but this might be offset by month-end inflows from government spending," the dealer said. Going forward, market participants will take cues from the RBI's Monetary Policy Committee decision due Wednesday and track the central bank's data on inflows through foreign currency non-resident bank deposits.

--Primary market
* HDFC Bank and Union Bank raised funds through CD Thursday. 

* HDB Financial, L&T Finance, HDFC Securities, and Jio Credit raised funds through CPs Thursday. 

--Secondary market

* HDFC Bank Ltd.'s CD maturing Aug. 25 was traded twice at a weighted average yield of 6.49%.   
* Kotak Mahindra Prime Ltd.'s CP maturing Monday was traded twice at a weighted average yield of 5.90%. 

The following were the volumes, in INR billion, in the secondary market for short-term debt at 1714 IST, as detailed on CCIL's F-TRAC platform:

End

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

Edited by Akul Nishant Akhoury

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