Neutral impactEconomy
Banks holding off upping term deposit rates by relying on CD issuances for resource mobilisation
BusinessLine 1 hr ago·1 Nov 2026, 2:15 pm
In October, Indian banks raised fresh funds mainly through certificates of deposit (CDs) rather than by increasing the rates on traditional term deposits. Net new CD issuance reached about ₹19,905 crore, with the weighted‑average yield climbing to 6.93 percent, while term‑deposit rates were left unchanged.
For retail investors, the shift means that the higher‑yielding CD market may offer a better short‑term return than a standard term deposit, but CDs are typically issued in larger denominations and may have different liquidity features. Banks’ reliance on CDs also signals that they are managing funding costs without passing higher rates to depositors, which can keep the overall cost of borrowing stable.
Investors should keep an eye on the Reserve Bank of India's policy outlook, any changes in banks’ CD pricing, and whether term‑deposit rates are adjusted in the coming months. A sustained rise in CD yields could widen the spread between safe‑deposit products and market rates, influencing portfolio allocation decisions.
Excerpt from BusinessLine
Net incremental CD issuance of ₹19,905 crore in October as weighted average rate rises to 6.93%; term deposit rates stay unchanged Banks seem to be holding off upping term deposit rates in the wake of the hike in repo rate and shrinking liquidity surplus by relying on Certificate of Deposits (CD) issuances for…Read the original at BusinessLine
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- Category: Economy.
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