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Informist, Tuesday, Aug. 18, 2026

 

By Meera Nair

 

MUMBAI – Rates on certificates of deposit and commercial papers rose across tenors on Tuesday as inflows into foreign currency non-resident (bank) deposits tapered, even as surplus liquidity continued to support banks, dealers said. Secondary-market activity in commercial paper increased as some investors concentrated on short-term selling, they said.

 

Three-month CD yields rose 5 basis points to 6.40-6.45%, while six-month yields increased 5-10 bps to 6.75% from 6.65-6.70%. One-year CDs were dealt at 7.27%.

 

"The shorter segments are still active even after the rates went up. It was just one PSU (public sector undertaking) that participated in the one-year segment today (Tuesday)," a dealer at a brokerage said.

 

Banks expect further changes in market rates as FCNR(B) inflows taper and issuances pick up, the dealer said. "Banks think more changes are going to come in the market after the flows from FCNR end and so many issuances can come soon," the dealer said.

 

Three-month AAA-rated commercial papers issued by non-banking finance companies rose to 6.90% from 6.80-6.84% Monday, while six-month CP yields were steady at 7.10-7.15%. One-year CP yields rose 5 bps to 7.55-7.60%.

 

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. Banks are not necessarily issuing CDs because the system continues to have surplus liquidity, but some large banks are still participating as buyers are available for short-term CDs, another dealer said.

 

"Banks are not necessarily coming to the CD market because the system is already adding liquidity. But still some large banks are coming to the scene because there are some buyers. There are some banks that are buying 1-to 10-day kind of CDs," the dealer said.

 

Banks with surplus liquidity are also deploying funds in the market for short periods, while some banks with liquidity mismatches continue to borrow through CDs, the dealer said.

 

"Some banks are issuing CDs because there is a mismatch in liquidity. Some banks have higher liquidity. Some banks are borrowing funds, in spite of whatever FCNR money is coming from," the dealer said.

 

The dealer said the CD market is increasingly reflecting differences in banks' liquidity positions and the rates at which they are willing to deploy funds.

 

"Tactical short-term deployment is also there. So, basically, some people are doing short-term deployment also. So, you know, now the CD market is quite clearly telling us that it is not a liquidity problem for the bank to issue CDs also," the dealer said.

 

The net liquidity absorbed by the RBI – a proxy for liquidity surplus – fell slightly to INR 3.63 trillion Monday from INR 3.64 trillion Sunday.

 

Secondary market turnover in CDs halved to INR 50.90 billion Tuesday from INR 103.80 billion on Monday, according to Clearing Corp. of India Ltd. data. Primary market CD issuances also fell sharply to INR 7.5 billion from INR 38.75 billion a day earlier.

 

YES Bank and Punjab and Sind Bank were the only issuers. YES Bank raised INR 5.00 billion through a 90-day CD at a weighted average yield of 6.60%, while Punjab and Sind Bank raised INR 2.5 billion through a 90-day CD at 6.48%.

 

The CD market is likely to remain challenging as long as the RBI continues to absorb surplus liquidity from the banking system, a dealer said.

 

"This year, CDs are going to be very difficult till the time the RBI absorbs the excess liquidity fully from the system. So, now, if you see very high liquidity there, the RBI has started absorbing this excess, and banks are also still issuing CDs. So, it is a very interesting scenario currently happening," the dealer said.

 

Secondary market turnover in CPs rose sharply to INR 80.10 billion Tuesday from INR 63.50 billion Monday. Fresh CP issuances were, however, marginally lower at INR 55.57 billion as of 1705 IST, compared with INR 53.25 billion a day earlier. Jio Credit, Tata Communications, Tata Projects, ICICI Home Finance Co., TVS Credit Services, and Whizdm Finance were among the issuers.

 

Jio Credit raised INR 5 billion through a CP maturing in 62 days at a weighted average yield of 6.75%, while Tata Communications raised INR 8 billion at 6.50%. Tata Projects, ICICI Home Finance, and TVS Credit Services each raised INR 2.00 billion each at weighted average yields of 6.64%, 6.48%, and 7.00%, respectively.

 

--Primary market 

* YES Bank and Punjab and Sind Bank issued CDs on Tuesday.

* Jio Credit, Tata Communications, Tata Projects, ICICI Home Finance Co., TVS Credit Services, and Whizdm Finance were among the CP issuers Tuesday.

 

--Secondary market

* HDFC Bank's CD maturing Wednesday was traded three times at a weighted average yield of 5.68%.
* NTPC's CP maturing Wednesday was traded four times at a weighted average yield of 5.06%.

 

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 papers
Tuesday	Monday	Tuesday	Monday
50.90	103.80	80.10	63.50

 

End

 

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

 

Edited by Saji George Titus

 

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