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Short-Term Debt: CD supply rises on demand for funds from PSU banks

Informist, Monday, Mar 21, 2022


By Vishal Sangani


MUMBAI – Issuances of certificates of deposit rose today as a few state-owned banks tapped the market to meet fresh requirement for funds, dealers said.


Other financial institutions also tapped the market to roll over papers set to mature and to meet the fresh requirement for funds, dealers said.


So far today, CDs aggregating 80.00 bln rupees were issued, as against nil sold on Thursday. Canara Bank was the major issuer. The bank raised 35.00 bln rupees through papers maturing in three months at 3.92%.


Market participants expect supply of certificates of deposit to rise in the coming days as banks will tap the market to meet credit disbursement targets and due to fall in surplus liquidity.


Usually, fundraising by banks rises towards the end of every quarter to meet quarter-end requirements and boost their balance sheet.


Liquidity in the banking system is currently estimated to be in a surplus of over 5.21 trln rupees as against 5.37 trln rupees on Thursday. The liquidity surplus narrowed sharply because of outflows on account of advance tax payments for Jan-Mar.


Surplus liquidity in the banking system is expected to narrow further due to outflows for goods and services tax payments.


Domestic financial markets were closed Friday on account of Holi.


Meanwhile, issuances of commercial papers fell as most issuers remained on the sidelines because of tepid demand for funds amid absence of big-ticket issuances, dealers said.


So far today, only ICICI Securities tapped the market, raising 1.25 bln rupees. On Thursday, CPs to the tune of 14.00 bln rupees were issued.


Demand for CPs from mutual funds was also low, as they opted to invest more in CDs as they carry lower risk than CPs, dealers said.


Rates on short-term debt securities remained in a narrow range due to lack of significant triggers.


Rates on three-month CPs of manufacturing companies were quoted at 4.05-4.20%, while those on papers of non-bank finance companies at 4.30-4.55%.


Rates on three-month CDs were at 3.95-4.15%.


–Primary market

* Indian Bank, Small Industries Development Bank of India and Canara Bank raised funds through CDs.


–Secondary market

* Axis Bank’s CD maturing on Jun 20 was dealt three times at a weighted average yield of 3.9501%

* CP of Bharat Heavy Electricals maturing on Tuesday was dealt three times at a weighted average yield of 3.6139%


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


Certificates of deposit

Commercial papers







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




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


Edited by Ashish Shirke


Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.


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Source: Cogencis

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