Certificates of deposit maturing up to six-months were mostly issued today because mutual funds (MFs) were only keen on investing in shorter-tenure papers, dealers said.
“MFs received inflows in their liquid schemes and so preferred to invest in shorter-tenure papers,” said a dealer with a MF.
Around Rs 900 crore worth of CDs were today placed in the market.
Most traders also expect the rates to remain stable for sometime and so choose to invest in papers maturing up to November.
Rates on short-term papers have fallen 50-60 basis points since mid-April.
Banks too are not in rush to raise funds as liquidity is still abundant in the banking system. In April, banks placed around Rs 19,000 crore worth of CDs.
Three-month CDs were quoted at 4.20-4.40 per cent, compared with 4.15-4.35per cent on Monday, while three-month commercial papers were quoted at 4.40-4.60 per cent, compared with 4.50-4.70 per cent on Tuesday.
One-year CDs were quoted at 6.10-6.30 per cent, compared with 6.15-6.35 per cent.
Source: http://www.business-standard.com/india/news/mfs-buyto-6-month-corporate-deposits/393785/
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