Informist, Friday, Jun 10, 2022

By Vishal Sangani

MUMBAI – Canara Bank was the lone issuer of certificates of deposit today, raising 10 bln rupees through papers maturing in three months at 5.10%.

The state-owned bank tapped the market for its funding needs, as well as to roll over papers set to mature in the coming days.

Supply of CDs is expected to rise, as the bank will try to roll over CDs and because of a pick up in demand for credit owing to improved business activity.

Issuances of CDs will also surge at the end of the quarter, as banks borrow funds to meet their requirements and to disburse short-term loans to shore up their balance sheets.

Advances of the Indian banking system registered a growth of 11.04% year-on-year as on May 20, showcasing the highest on-year growth in 32 months.

As of May 20, total loans were at 120.27 trln rupees, down from 134.14 bln rupees over the 15-day period.

"After witnessing modest growth in recent years, the outlook for bank credit growth is expected to remain positive due to economic expansion, rise in government and private capital expenditure, rising commodity prices, and a retail credit push," CareEdge said in a report dated Jun 2.

Data released by the Reserve Bank of India also showed that credit growth in the retail segment remained strong, driven by home and vehicle loans.

On the other hand, issuances of commercial papers were steady today, as a few companies tapped the market to roll over papers set to mature in the coming days, dealers said.

So far today, CPs aggregating 21.00 bln rupees were issued as against 20.50 bln rupees on Thursday. NTPC was the major issuer, raising 20.00 bln rupees through papers maturing on Sep 13 at 5.12%.

Participation was also low, as traders avoided placing large bets ahead of the weekend.

Rates on short-term debt papers were range-bound today, as liquidity remains in surplus, dealers said.

Rates on three-month CPs of non-bank finance companies were quoted at 5.35-5.65%, while those on papers of manufacturing companies were quoted at 5.15-5.40%.

Rates on three-month certificates of deposit were quoted at 5.10-5.30%.

Liquidity in the banking system is currently estimated to be in a surplus of over 3.22 trln rupees as against 3.29 trln rupees on Thursday.

The surplus is expected to widen in the coming days due to inflows of 596.69 bln rupees on account of the redemption of the 8.15%, 2022 bond.

--Primary market

* GIC Housing Finance and NTPC raised funds through CPs.

--Secondary market

* Export Import Bank of India's CD maturing on Sep 14 was dealt four times at a weighted average yield of 5.1601%

* Vendata's CP maturing on Jul 22 was dealt three times at a weighted average yield of 6.0002%

At 1530 IST, following were the volumes--in bln rupees--in the secondary market for short-term debt, as detailed by the Clearing Corp of India's F-TRAC platform:

NOTE: Details of the deals have been received from market sources.

End

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

Edited by Namrata Rao

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