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Informist, Monday, Aug. 17, 2026

 

By Meera Nair 

 

MUMBAI – Rates on certificates of deposit and commercial papers were mixed across key tenors on Monday as banks continued to sit on surplus liquidity, aided by inflows from foreign currency non-resident (banks) deposits, dealers said. Trading activity in the CP market, however, was higher than on Friday, while CD activity remained concentrated in the three-month segment, they said.

 

Three-month CD yields were quoted at 6.35-6.40%, unchanged from Friday, while six-month yields were at 6.65-6.70%, down 5 bps from 6.70-6.75%. There were no trades in the one-year segment.

 

"In the morning, the yields were 3-5 bps higher from Friday's level, but then again in the afternoon some PSUs (public sector undertakings) were traded at 6.35% in the three-month segment," a dealer from a public-sector bank said.

 

Three-month AAA-rated commercial papers issued by non-banking finance companies were quoted at 6.80-6.84%, up 5 bps from 6.75-6.80% on Friday, while six-month CPs were unchanged at 7.10-7.15%. One-year CP yields were at 7.50-7.55%, up 5 bps from 7.45-7.50%.

 

CP yields are likely to become more attractive in September as issuers are expected to return to the market for reissuances, while CDs continue to benefit from liquidity arising from FCNR(B) deposits, the dealer said.

 

"CP yields are going to get more attractive in September as they will come up with more reissuances... because CDs are getting rates from FCNR while CPs are not. So, there also trading and activity should happen and definitely will get more attractive," the dealer said.

 

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 net liquidity absorbed by the RBI, a proxy for surplus liquidity in the banking system, rose to INR 3.98 trillion on Friday from INR 3.54 trillion on Thursday. Funds parked by banks under the RBI's Standing Deposit Facility rose to INR 2.34 trillion on Friday, the highest since Aug. 7.

 

The secondary market turnover in CDs declined to INR 103.80 billion on Monday from INR 134.50 billion on Friday, according to Clearing Corp. of India Ltd. data. Primary market CD issuances, however, rose sharply to INR 38.75 billion from INR 6.50 billion a day earlier.

 

YES Bank Ltd., Punjab and Sind Bank, The Karur Vysya Bank Ltd. and DCB Bank Ltd. were among issuers of 90- and 91-day CDs. YES Bank raised INR 17.50 billion at a weighted average yield of 6.60%, while Punjab and Sind Bank raised INR 12.50 billion at 6.48%. The Karur Vysya Bank raised INR 5 billion at 6.54%, while DCB Bank raised INR 3.75 billion at 6.72%.

 

Secondary market turnover in CPs rose sharply to INR 63.50 billion from INR 40.55 billion on Friday. Fresh CP issuances, however, were sharply lower at INR 53.25 billion as of 1725 IST, compared with INR 105.56 billion a day earlier.

 

Sundaram Finance Ltd., Tata Steel, IIFL Finance Ltd., Manappuram Finance Ltd., JM Financial Properties and Holdings Ltd., Kistetsu Saison Finance India Pvt. Ltd., NU Vista Ltd. and Godrej Industries Ltd. were among the issuers.

 

Sundaram Finance raised INR 10 billion through a CP maturing at a weighted average yield of 6.37%, while Tata Steel raised INR 8 billion at 6.50%. IIFL Finance raised INR 5.25 billion through a 91-day paper at a weighted average yield of 8.60%, while Manappuram Finance raised a total of INR 7.5 billion at 7.23% and 7.23%. JM Financial Properties and Holdings raised INR 4.95 billion through a 91-day paper at 7.55%.

 

CD RATES SEEN RANGEBOUND AFTER FCNR(B) WINDOW CLOSES

CD yields are likely to remain range-bound in September even after the RBI's special FCNR(B) deposit mobilisation window closes on Aug. 31, as dealers expect additional foreign currency inflows before the deadline and continued surplus liquidity in the banking system.

 

Dealers expect FCNR(B) deposits to reach around $60 billion-$65 billion by the time the window closes. The additional inflows are expected to further increase durable liquidity, which dealers estimate could rise to INR 8.5 trillion-INR 9 trillion from the current INR 5 trillion-INR 6 trillion.

 

With banks already carrying substantial surplus liquidity, dealers said there may be limited incentive for them to raise funds through CDs, particularly as demand for bank funding remains subdued. Banks may instead allow maturing CDs to run off, reducing the need for fresh issuance and rollovers.

 

"CDs will remain rangebound post September as there are still a lot of funds yet to come. During closing the expectation is around $60 billion-$65 billion," a dealer said.

 

The market is expected to remain relatively stable unless external factors such as US Treasury yields, US CPI data or other global developments trigger a broader risk-off move. In such a scenario, dealers expect government bond yields to rise to a maximum of around 6.80-6.85%.

 

The three-month CD segment, which is currently the most actively traded tenor, could rise to around 6.70% in September if global or domestic factors turn unfavourable, dealers said. 

 

The RBI's variable rate reverse repo auctions are also expected to continue through mid-September as banks seek avenues to deploy surplus funds amid a lack of attractive investment opportunities, dealers said.

 

Despite expectations of limited fresh CD issuance, secondary-market trading is likely to continue as mutual funds rebalance and correct their portfolios, providing some activity in the market.

 

--Primary market 

* YES Bank Ltd., Punjab and Sind bank, The Karur Vysysa Bank Ltd., DCB Bank Ltd., were the CD issuers Monday.

* Sundaram Finance Ltd., Kistetsu Saison Finance India Pvt. Ltd., Godrej Industries Ltd. were among the CP issuers Monday.

 

--Secondary market

* Axis Bank's CD maturing Tuesday was traded six times at a weighted average yield of 5.15%.
* Jamnagar Utilities and Power Pvt. Ltd.'s CP maturing Tuesday was traded six times at a weighted average yield of 5.13%.

 

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 papers
Monday	Friday	Monday	Friday
103.80	124.25	63.50	37.55

 

End

 

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

 

Edited by Deepshikha Bhardwaj

 

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