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Informist, Thursday, Oct. 1, 2026

 

By Meera Nair

 

MUMBAI – Yields on certificates of deposit and commercial papers rose sharply at the beginning of the new quarter, dealers said Thursday. However, market activity remained subdued ahead of the long weekend for Gandhi Jayanti, they said.

 

Yields on AAA-rated three-month CDs were at 6.50-6.55%, up from 6.25-6.30% Wednesday, while six-month CD yields were quoted at 7.20-7.25%, compared with 6.80-6.85% in the previous session. Yields on one-year CDs were at 7.55-7.60%, up from 7.40-7.45%. 

 

"These kinds of range changes are usual at the beginning of every quarter... but there was no activity at all in the primary market as it is a long weekend ahead," a dealer from a brokerage said.

 

Yields on three-month AAA-rated non-banking finance company CPs were at 7.20-7.25%, up 5 basis points from 7.15-7.20% Wednesday, while six-month yields were around 7.50%, compared with 7.30-7.35% Wednesday. One-year yields were at 7.90%, compared with 7.80-7.85%.

 

"In the CP market also there were very few issuances and whatever activity happened in the secondary market was because of rollovers," the brokerage dealer said.

 

"We can expect any major issuances only after Oct. 10, that is, after the (monetary) policy meeting. Until then, people will be in wait-and-watch mode, trying to understand the market. According to my understanding, more activity can be seen in the JFM (January-February-March) segment in both CD and CP markets," the dealer said.

 

"It's the beginning of the new quarter, liquidity is comfortable, so people should park more at the VRRR also," a dealer at a state-owned bank said. "Even yesterday there was hardly any borrowing pressure as corporates had taken disbursements on Thursday and Friday itself due to the strike, so everyone can [have] excess cash on their books."

 

Bank unions, which had called a strike from Monday to Wednesday, deferred it on Sunday. Banks had prepared for a disruption in operations at quarter-end and secured their funding last week, as large corporate customers had, dealers said. With cash needs comfortably met and overnight rates low, banks parked INR 1.68 trillion at the RBI's four-day, INR 2.00-trillion variable rate reverse repo auction.

 

The RBI's net liquidity absorbed — a proxy for the banking system's liquidity surplus — rose to INR 4.85 trillion Wednesday from INR 4.66 trillion Tuesday. Traders attributed the rise to the government's month-end spending, even as the RBI's foreign exchange operations were consistently draining rupee liquidity, dealers said.

 

Meanwhile, data released Thursday showed the net durable liquidity surplus climbed to a record high of INR 13.94 trillion as of Sept. 15. The central bank began releasing data on the fortnightly metric only in February 2020, and the previous record was INR 12 trillion in September 2021. As of Aug. 31, the liquidity surplus was INR 10.66 trillion. Traders attributed the rise to the RBI's special schemes to attract foreign capital. Foreign currency non-resident (bank) deposits alone brought in $133 billion in inflows between Jun. 8 and Aug. 31, and the RBI's special window to swap dollars into rupees was open until Sept. 11.

 

Only one CD was issued Thursday, with Union Bank tapping the market to raise INR 3.5 billion through a 91-day paper at a weighted average yield of 6.53%. Primary CP issuances fell to INR 19.80 billion from INR 27.30 billion Wednesday, according to data from Clearing Corp. of India. 

 

Tata Steel raised a total of INR 11 billion through two CPs at weighted average yields of 6.27% and 6.37%, respectively, while Bajaj Housing Finance raised INR 2.5 billion through a 74-day CP at 6.47%. Kotak Securities raised INR 2 billion at weighted average yields of 6.82% and 6.95%, while HDFC Securities raised INR 1 billion through a 91-day CP at 7.07%.

 

In the secondary market, CD volume fell drastically to INR 43.85 billion from INR 72.05 billion on Wednesday, while CP volumes rose to INR 21.90 billion from INR 10.75 billion.

 

--Primary market

* Union Bank was the only CD issuer Thursday.

* Tata Steel, Bajaj Housing Finance, Kotak Securities, and HDFC Securities issued CPs Thursday.  

 

--Secondary market

* Union Bank of India's CD maturing Oct. 27 was traded once at a weighted average yield of 5.70%.
* NTPC's CP maturing Monday was traded once at a weighted average yield of 5.05%.

 

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
43.85	72.05	21.90	10.75

 

End

 

Edited by Saji George Titus

 

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