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Informist, Thursday, Sept. 3, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Yields on certificates of deposit and commercial papers fell across maturities Thursday, driven by abundant liquidity in the banking system on account of foreign currency non-resident (bank) deposit inflows, dealers said. Mutual funds and other investors were most active in the three-month segment, they said.

 

"Mainly surplus liquidity and FCNR(B) flows are playing a key role these days... as of now there is no clear picture," a dealer at a private sector bank said. "Once things settle around these flows, maybe we will see which banks will come to the market," a dealer at a private-sector bank said. The RBI's net liquidity absorption – a proxy for the banking system liquidity surplus – jumped nearly INR 2 trillion overnight to INR 9.70 trillion on Wednesday.

 

Yields on 'AAA'-rated three-month CDs fell to 5.80-5.90%, down from 6.10-6.20% Wednesday. Yields on six-month CDs fell to 6.30-6.35% from 6.45-6.65% Wednesday, while yields on one-year CDs were at 6.80-60.90%, down from 6.95% on the previous day. Yields on 'AAA'-rated three-month CPs issued by non-banking financial companies fell to 6.60-6.70% Thursday from 6.75-6.80% Wednesday. Yields on six-month CPs fell to 7.00-7.10% from 7.15-7.20% on Wednesday. 

 

Primary activity in the CD market rose as the fall in rates attracted issuers to raise funds. However, volume could have risen further as some deals did not materialise because investors were unwilling to accept rates offered by issuers. Banks borrowed INR 140 billion through certificates of deposit on Thursday, up from INR 91.10 billion, according to data on Clearing Corp. of India Ltd.

 

Bank of India was the largest issuer Thursday, mobilising INR 60 billion through two CDs. It raised INR 35 billion through a 90-day CD at a weighted average yield of 5.80% and INR 25 billion through a 91-day CD at 6.18%. HDFC Bank raised INR 32.50 billion through a 91-day CD at a yield of 5.80%. Other issuers included Union Bank of India, Central Bank of India, and CSB Bank. 

 

In the commercial paper market, primary issuances fell from the previous session as several non-banking financial companies frontloaded their borrowing to take advantage of the significant fall in rates Wednesday. Several issuers had raised funds on Wednesday, which contributed to the decline in issuances on Thursday.

 

Primary issuances fell to INR 76.88 billion from INR 242.81 billion Wednesday, according to CCIL data. Kotak Securities was the largest issuer Thursday, raising INR 11 billion through a 91-day CP at 7.09%, while ICICI Securities raised INR 10 billion through a 53-day CP. Other key issuers included Godrej Properties, Capri Global Capital, Mirae Asset Financial Services, Trust Investment Advisors, and Sundaram Home Finance. 

 

Dealers said if rates fall further in the short-term debt market, issuances may pick up. Banks, oil marketing companies and non-banking financial companies may raise funds through money market instruments, they said.

 

In the secondary market, CD market volume rose to INR 134.47 billion Thursday from INR 111.55 billion Wednesday, while CP market volume fell to INR 99.15 billion from INR 151.10 billion. 

 

--Primary market

* Bank of India, Union Bank of India, HDFC Bank, Central Bank of India and CSB Bank were among the key CD issuers Thursday 

* Kotak Securities, ICICI Securities, Godrej Properties, Capri Global Capital, Mirae Asset Financial Services, Trust Investment Advisors, and Sundaram Home Finance were among the key CP issuers Thursday.

 

--Secondary market

* Union Bank of India's CD maturing Friday was traded eight times at a weighted average yield of 4.66%.
* Kotak Securities' CP maturing Friday was traded six times at a weighted average yield of 4.75%.

 

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
134.47	111.55	99.15	151.10

 

End

 

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

 

Edited by Saji George Titus

 

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