Informist, Friday, May 20, 2022
By Vishal Sangani
MUMBAI – The issuances of certificates of deposit rose today as a few private sector banks tapped the market to roll over papers set to mature in the coming days and meet the fresh requirements for funds.
So far today, CDs aggregating 21.00 bln rupees were issued. IDFC First Bank was the major issuer, raising 13.50 bln rupees through papers maturing in three months at 5.49%.
On Thursday, Indian Bank was the only issuer, that had raised 8.00 bln rupees through CDs.
Private sector banks also tapped the market as demand for credit picked up due to an uptick in business activity.
According to the latest data from the Reserve Bank of India, advances in the Indian banking system were at 120.46 trln rupees as on May 6, up 10.82% on year.
Meanwhile, supply of fresh CDs by state-owned banks were low as there is no immediate need for funds.
On the other hand, funds raised through commercial papers fell today in the absence of big-ticket issuances, dealers said.
So far today, CPs aggregating 9.00 bln rupees were issued, as against 72.20 bln rupees sold on Thursday. Tata Power Co was the major issuer, raising 5.00 bln rupees through papers maturing in three-month at 5.25%.
On Thursday, Housing Development Finance Corp had raised 27.50 bln rupees through CPs.
Some companies tapped the market today to roll over papers that are set to mature in the coming days and also to meet fresh requirements for funds.
Rates on short-term debt papers were unchanged today due to lower issuances, dealers said.
Rates on three-month CPs of non-bank finance companies were quoted at 5.50-5.80%, while those on papers of manufacturing companies were quoted at 5.25-5.45%.
Rates on three-month CDs were quoted at 5.10-5.30%.
Rates on short-term debt papers are expected to rise in the coming days due to a decline in surplus liquidity in the banking system and a likely rate hike by the Reserve Bank of India in the June policy.
Liquidity in the banking system is currently estimated to be in a surplus of over 4.79 trln rupees as against 4.98 trln rupees on Thursday.
Liquidity in the banking system is expected to narrow further in the coming days due to outflows on account of goods and services tax payments.
The hike in the cash reserve ratio of banks will also reduce liquidity to the tune of 870 bln rupees.
On May 4, the RBI announced a hike in the cash reserve ratio of banks by 50 basis points to 4.5% of net demand and time liabilities, effective from Saturday.
Market participants expect a 35- to 50-basis-point repo rate hike at the upcoming policy meeting in June to curb inflation, following comments from policymakers in the minutes of the Monetary Policy Committee’s off-cycle meeting in May.
–Primary market
* Godrej Properties, GIC Housing Finance, Network 18 Media and Investments, TV 18 Broadcast and Tata Power Co raised funds through CPs.
–Secondary market
* HDFC Bank’s CD maturing on Aug 17 was dealt six times at a weighted average yield of 5.1618%
* Reliance Jio Infocomm’s CP maturing on Jun 13 was dealt at a weighted average yield of 4.6497%
At 1530 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:
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 Sushmita Mukherjee
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