With liquidity worry, banks return to CD market

Traditionally by the financial year-end, banks do issue a huge amount of CDs

After a demonetisation-induced dip in issuance, banks are returning to the certificates of deposit (CD) market, even as liquidity seems more than adequate. 

CDs are short-term instruments issued by banks that mature within a year. The most popular form is those doing so in three months. 

In the fortnight ended January 20, banks issued Rs 8,310 crore of CDs.  In the fortnight before demonetisation, banks had issued Rs 5,154 crore of CDs, as of the end of October 28, Reserve Bank (RBI) data shows. In the midst of demonetisation, when banks were inundated with heavy deposit flow, CD issuance had dipped to