More Stories

Informist, Wednesday, Aug. 19, 2026

 

By Meera Nair

 

MUMBAI – Rates on six-month certificates of deposit and commercial papers rose sharply Wednesday as market participants remained cautious amid higher crude oil prices and expectations that rates will rise once foreign currency non-resident (bank) deposit inflows taper, dealers said. Surplus liquidity in the banking system continued to support demand for short-term funds, while secondary-market CD activity increased due to rollovers, they said.

 

Rates on six-month CDs rose 10 basis points to 6.75% from 6.65-6.70%, while three-month CD yields were steady at 6.40-6.45%. One-year CD yields were at 7.25-7.30%, compared with 7.27?ay earlier.

 

"Right now, mutual funds think rates will go up further after FCNR(B) inflows close in September, and the increase in crude oil prices is also a concern. GST outflows are also happening," a dealer at a brokerage said.

 

Six-month CP yields rose 15 bps to 7.25-7.30% from 7.10-7.15%, while three-month AAA-rated commercial papers issued by non-banking finance companies were quoted at 6.90-7.00%, compared with 6.90?ay earlier. One-year CP yields were unchanged at 7.55-7.60%.

 

While primary market activity was concentrated mainly in three-month CDs and CPs, participants largely stayed away from the three-month papers in the secondary market, the dealer said. "We can see more issuances in both CDs and CPs in the coming days despite surplus liquidity in the system. From September, we expect rates in key tenors to be higher," the dealer said.

 

A dealer with a private-sector bank said banks have increasingly been issuing shorter-tenor CDs of up to one month to manage asset-liability positions and improve their liquidity coverage ratio. This trend does not necessarily indicate a liquidity shortage at banks, the dealer said.

 

"Tactical short-term deployment is also happening. The CD market is quite clearly telling us that it is not a liquidity problem for banks to issue CDs. It is about the price at which different banks are willing to deploy funds," a market participant said.

 

Secondary-market turnover in CDs rose to INR 91.27 billion Wednesday from INR 50.90 billion Tuesday, according to Clearing Corp of India Ltd data. Primary-market CD issuances rose sharply to INR 45.75 billion from INR 7.50 billion a day earlier, with YES Bank and Small Industries Development Bank of India being the only issuers.

 

YES Bank raised INR 9.50 billion through a 90-day CD at a weighted average yield of 6.60%, while SIDBI raised INR 36.25 billion through a one-year CD at 7.27%.

 

Secondary-market turnover in CPs nearly halved to INR 43.80 billion Wednesday from INR 80.10 billion Tuesday. Fresh CP issuances, however, rose to INR 97.70 billion as of 1747 IST from INR 55.57 billion a day earlier, according to market data.

 

Power Finance Corp, JSW Energy, Birla Group Holdings, Godrej Finance, IIFL Finance, Bajaj Financial Securities, and ICICI Securities were among the issuers. Power Finance raised INR 21.00 billion through a 91-day CP at a weighted average yield of 6.39%, while JSW Energy raised INR 5.00 billion at 7.00%. Birla Group Holdings raised INR 3.25 billion at a weighted average yield of 7.02%. Godrej Finance, IIFL Finance and Bajaj Financial Securities raised INR 3.00 billion each at weighted average yields of 7.10%, 8.65% and 6.87%, respectively.

 

RATES OUTLOOK

"For the next two days, rates in the most-traded segments, such as three-month CDs, are likely to rise by around 5 basis points. The three-month CD is currently trading around 6.40%, and we expect it to rise to 6.45% tomorrow (Thursday). Issuances and rates are likely to rise in the coming days and weeks," another dealer with a brokerage firm said.

 

"The market is hawkish, and this is likely to continue until the next monetary policy meeting," the dealer said.

The net liquidity absorbed by the Reserve Bank of India, a proxy for surplus liquidity in the banking system, rose to INR 3.91 trillion Tuesday from INR 3.63 trillion Monday. 

 

--Primary market 

* YES Bank and SIDBI were the only CD issuers on Wednesday.

* Power Finance, JSW Energy, Birla Group Holdings, Godrej Finance, IIFL Finance, and ICICI Securities were among the CP issuers on Wednesday.

 

--Secondary market

* Bank of Baroda's CD maturing Thursday was traded nine times at a weighted average yield of 5.06%.
* Tata Projects' CP maturing Thursday was traded once at a weighted average yield of 5.18%.

 

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
Wednesday	Tuesday	Wednesday	Tuesday
91.27	50.90	43.80	80.10

 

End

 

US$1 = INR 95.7525

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

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.