CD issuances see a rise

Issuances of certificates of deposit (CDs) rose on Tuesday as banks were keen on raising funds with the liquidity remaining tight due to outflows towards advance taxes, dealers said.

Around Rs 45,000-50,000 crore will move out of the banking system this week due to payments towards corporate advance taxes. Three-month CDs were dealt at 8.9-9.1 per cent, flat compared to Monday, while three-month commercial papers (CPs) quoted 9.2-9.4 per cent against 9.3-9.5 per cent.

Rates for one-year papers were 9.3-9.5 per cent, flat against Monday.

Fund houses also invested in CDs as they were holding on to cash since last week on expectation that they would face redemptions for advance taxes.