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Informist, Thursday, Aug. 13, 2026

 

By Meera Nair

 

MUMBAI – Rates on certificates of deposit and commercial paper remained range-bound across key tenors Thursday as banks continued to sit on surplus liquidity, thanks to foreign currency non-resident (banks) deposit inflows, while trading in the CD market was largely driven by rollovers, dealers said.

 

Three-month CD yields were quoted at 6.35-6.40%, unchanged from Wednesday, while six-month yields were at 6.70%. One-year CD yields were also unchanged at around 7.20%.

 

"Banks are sitting on surplus cash after the FCNR money has been deployed, so it is very common for them to not do issuances," a dealer from a public-sector bank said, "but trading will happen as there are rollovers happening meanwhile." The dealer said banks monitor longer-tenor CD, particularly six-month and one-year paper, more closely only when levels in the three-month segment are not favourable.

 

Three-month "AAA"-rated commercial paper issued by non-banking finance companies were quoted at around 6.75% while six-month and one-year CP yields were unchanged from Wednesday at 7.05-7.10% and 7.45-7.50%, respectively. Trading activity in both the CD and CP markets was concentrated mainly in the three-month segment, where banks were able to secure comparatively attractive levels, the dealer said.

 

The liquidity surplus inched up slightly as banks converted dollar-denominated inflows from FCNR(B) deposits into rupee liquidity. However, regular dollar sales by the Reserve Bank of India limited the increase in systemic liquidity despite robust inflows into FCNR(B) deposits, dealers said. The net liquidity absorbed by the RBI, an indicator of the banking system's liquidity surplus, rose to INR 3.43 trillion Wednesday from INR 3.35 trillion on Tuesday.

 

Secondary market turnover in certificates of deposit rose sharply to INR 143.40 billion Thursday from INR 124.90 billion Wednesday, according to Clearing Corp. of India Ltd. data. Primary CD issuances also increased to INR 35 billion from INR 5 billion a day earlier, with Punjab National Bank, Central Bank of India, Karur Vysya Bank, and DCB Bank among the issuers. All the CD had a 91-day maturity.

 

Punjab National Bank raised INR 25 billion at a weighted average yield of 6.35% while Central Bank of India raised INR 5 billion at 6.40%. Karur Vysya Bank raised INR 2.5 billion through a 91-day CD at a weighted average yield of 6.62%, and DCB Bank raised INR 1.25 billion through CD of the same maturity at 6.72%.

 

The dealer said the three-month segment was likely to remain relatively attractive as banks continue to have comfortable liquidity.

"After September, i.e. once the FCNR money has stopped deploying, there are chances that the six-month rates will go high, but up to three months it will mostly be in favourable rates," the dealer said. "As of now there's no visibility in the six-month segment. Mutual funds are selling only selective shorter segments up to three months."

 

Secondary market turnover in commercial paper fell to INR 50.15 billion from INR 90.45 billion Wednesday. Fresh issuances declined to INR 72.93 billion as of 1713 IST from INR 95.90 billion a day earlier. Cholamandalam Investment and Finance Co. Ltd., ICICI Home Finance, TVS Credit Services Ltd., HDFC Securities Ltd., Julius Baer Capital India Pvt. Ltd., CESC Ltd., Navi Finserv, and L&T Finance were among the issuers.

 

Cholamandalam Investment raised INR 5 billion through commercial paper maturing on Nov 12 at a weighted average yield of 6.93% while ICICI Home Finance raised INR 4 billion at 6.65%. TVS Credit Services raised INR 3 billion through 91-day paper at a weighted average yield of 7.00%. HDFC Securities Ltd. and Julius Baer Capital India raised INR 2.5 billion each at 6.98% and 7.09%, respectively. CESC raised INR 2 billion through 91-day paper at 6.75% and Navi Finserv raised INR 1.64 billion through one-year paper at 9.80%.

 

Dealers expect rates in both the CD and CP markets to remain range-bound in the near term, with ample liquidity likely to keep shorter-tenor borrowing costs comfortable. "I think rates will come down for both CP and CD in the next week, making it more attractive for the dealers, because as of now liquidity is ample and will be in a comfortable level till this calendar yearend," a dealer from a brokerage firm said.

 

The public-sector bank dealer expects the market to remain largely stable for the rest of the year, with no major change anticipated after the next RBI policy meeting in October. "During the entire calendar year, don't expect any drastic change in the market, not even after the next RBI policy meeting. I see only a rate hike in the February policy meeting," the dealer said, adding that the RBI is likely to focus more on persistent factors such as core CPI inflation than transient movement in food prices.

 

The dealer said yields could decline further if global tensions ease and supply-chain disruptions improve, while the market is expected to remain range-bound with ample liquidity through December.

 

--Primary market 

* Punjab National Bank, Central Bank of India, Karur Vysya Bank, and DCB Bank were the CD issuers Thursday.

* Cholamandalam Investment and Finance Co. Ltd., TVS Credit Services Ltd., HDFC Securities Ltd., Julius Baer Capital India Pvt. Ltd., CESC Ltd., Navi Finserv Ltd., and L&T Finance Ltd. were among the CP issuers Thursday.

 

--Secondary market

* Canara Bank's CD maturing Friday was traded 14 times at a weighted average yield of 5.13%.
* National Bank for Agriculture and Rural Development's CP maturing Friday was traded 10 times at a weighted average yield of 5.15%.

 

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
Thursday	Wednesday	Thursday	Wednesday
143.40	124.90	50.15	90.45

 

End

 

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

 

Edited by Rajeev Pai

 

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