Informist, Thursday, Feb 22, 2024
By Asmita Patil
MUMBAI – Funds raised through certificates of deposit rose today amid a widening liquidity deficit in the banking system, dealers said. Banks and financial institutions raised 145 bln rupees through CDs so far today, as compared to 27.25 bln rupees on Wednesday.
Small Industries Development Bank of India became the largest issuer by raising 40 bln rupees through CDs maturing in one-year at 7.83%, followed by Canara Bank with CDs worth 30 bln rupees at 7.78%. Punjab National Bank raised around 60 bln rupees through CDs maturing in three months and one-year at different rates, dealers said.
The liquidity deficit widened to 2.52 trln rupees on Wednesday from 1.94 trln rupees on Tuesday, according to data from the Reserve Bank of India. Despite the widening liquidity deficit, demand for short-term papers has improved owing to fresh inflows in liquid schemes of mutual funds from corporates, dealers said.
“The demand has improved but three-month CPs are still expensive and even one-year rates are on the higher side,” an official with a large non-banking finance company said. “We don’t expect much variation in these rates up until March.”
Funds raised through commercial papers rose today due to big-ticket issuances by SIDBI and National Bank for Agriculture and Rural Development, dealers said. So far in the day, companies and financial institutions have raised 114 bln rupees through CPs, compared with 44 bln rupees on Wednesday. Of the total, SIDBI raised 35 bln rupees through CPs maturing in three months at 7.75%, while NABARD raised 50 bln rupees through papers maturing in three months at 7.80%.
Multiple issuers raised funds through same maturity CPs at different rates today due to increased demand from mutual funds in the second half of the trading session, dealers said. ICICI Securities raised funds through two CPs maturing in three months at 8.5250% and 8.62%.
Improved demand from mutual funds led to a fall in rates on short-term debt instruments today. Rates on CPs issued by non-banking financial companies fell to 8.35-8.55% from 8.40-8.60% on Wednesday. Rates for similar maturity CPs issued by manufacturing companies fell to 7.80-8.00% from 7.92-8.12% on Wednesday. Rates on CDs maturing in three months fell to 7.75-7.95 from 7.82-8.02% on Wednesday.
–Primary market
* ICICI Securities, Kotak Securities, HDB Financial Services, SIDBI, NABARD, Hero Fincorp, Poonawalla Fincorp, and Grasim Industries raised funds through CPs.
* SIDBI, Canara Bank, Punjab National Bank, and Bank of Baroda raised funds through CDs.
–Secondary market
* HDFC Bank’s CD maturing on Mar 20 was dealt thrice at a weighted average yield of 7.0999%
* Reliance Retail Ventures’ CP maturing on Friday was dealt four times at a weighted average yield of 6.4494%
At 1700 IST, the 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:
End
Edited by Deepshikha Bhardwaj
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