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Informist, Monday, Sept. 7, 2026

 

By Vaishali Tyagi

 

NEW DELHI – Fundraising through certificates of deposit and commercial papers remained subdued Monday as mutual funds, the most active participants, demanded higher rates, which kept some potential issuers away, dealers said. "A few issuers including banks and companies looked to raise funds through longer-tenure papers but struggled to close deals as their rate expectations were not met, with investors, mostly mutual funds, demanding higher rates," a dealer at a mid-sized brokerage firm said.

Overall activity remained subdued across tenures, with the longer segment taking the biggest hit, as traders awaited clarity on liquidity, dealers said. Even where funding requirements are emerging, participants are meeting them through the tri-party repo market, which is offering funds at cheaper rates, they said. Mutual funds sitting on excess cash are asking for higher rates to deploy funds, which is pushing rates up and leading to low volumes in the primary market as deals fail to materialise. For most of the day, the tri-party repo rate remained below the Reserve Bank of India's SDF rate due to a lack of demand for funds, as liquidity surplus remained above INR 10 trillion. The weighted average tri-party rate was at 4.59% Monday. 

 

Dealers said most banks, manufacturing companies, and non-banking finance companies have met their roll-over demand in the early days of September when rates fell, which also contributed to low issuances on Monday. Dealers said if liquidity remains this high, CD issuances will remain low, as demand for funds is weak amid excessive surplus liquidity.

 

Primary activity in the CD market fell to INR 13.50 billion Monday, sharply down from INR 58.50 billion Friday, according to data from Clearing Corp. of India Ltd. Only three banks issued CDs, and even then with a low quantum, amid ample liquidity in the system. City Union Bank issued CDs maturing in 91 days to raise INR 13.50 billion at a weighted average yield of 6.97%, while CSB Bank and Qatar National Bank borrowed INR 1 billion each via different-maturity CDs. 

 

Dealers said CD yields remained unchanged because of low trading in the market. Yields on 'AAA'-rated three-month CDs were at 5.85-5.90%, compared to 5.80-5.85% Friday. Yields on six-month CDs were at 6.35-6.40%, broadly similar to 6.35-6.45% in the previous session, while yields on one-year CDs were at 6.90-7.10%.

 

In the commercial paper market, primary issuances declined from the previous session as several investors await clarity on liquidity — whether the RBI will take extraordinary measures to bring down liquidity levels beyond conducting variable rate reverse repo auctions, dealers said. Primary issuances fell to INR 156.53 billion from INR 239.39 billion Friday, according to CCIL data. REC raised INR 15.50 billion at a weighted average yield of 6.45% through a 182-day CP, while Small Industries Development Bank of India raised INR 40 billion through a 91-day CP. Other key issuers included Bajaj Finance, Aditya Birla Housing Finance, IIFL Finance, ICICI Securities, Motilal Oswal Financial Services, DSP Finance, and Aditya Birla Money. 

 

Yields on 'AAA'-rated three-month CPs issued by non-banking financial companies were at 6.60-6.75% Monday, compared with 6.50-6.60% Friday. Yields on six-month CPs were at 6.90-7.00%, largely similar to 6.90-7.05% Friday, while one-year CDs were at 7.15-7.30%.

 

In the secondary market, CD market volume was at INR 111.75 billion Monday, down from INR 139.40 billion Friday, while CP market volume rose marginally to INR 114.40 billion from INR 105.90 billion.

 

--Primary market

* City Union Bank, CSB Bank and Qatar National Bank issued CDs Monday.

* REC, SIDBI, HDFC Securities, Bajaj Finance, Aditya Birla Housing Finance, IIFL Finance, ICICI Securities, Motilal Oswal Financial Services, DSP Finance, and Aditya Birla were among the key CP issuers Monday.  

 

--Secondary market

* Indian Bank's CD maturing Tuesday was traded six times at a weighted average yield of 4.64%.
* Reliance Retail Venture's CP maturing Tuesday was traded four times at a weighted average yield of 4.78%.

 

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
Monday	Friday	Monday	Friday
111.75	139.40	114.40	105.90

 

 

End

 

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

 

Edited by Saji George Titus

 

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