Issuances of short-term money market instruments fell today because banks were not keen on raising funds at the start of the quarter, dealers said.
“Banks are not keen on raising funds today and so there were hardly any offers in the market,” said a dealer with a state-owned bank.
Banks had raised around Rs 38,000 crore in June due to the tight liquidity in the banking system.
Over Rs 1 lakh crore had moved out of the banking system for payments towards advance taxes, 3G and broadband spectrum fee.
“Mutual funds are also not keen on investing in short-term papers due to no incremental inflows in their liquid schemes,” said a dealer with a mutual fund.
Three-month certificates of deposit (CDs) were quoted at 6.2-6.4 per cent today, flat compared with Wednesday, while commercial papers (CPs) were quoted at 6.7-6.9 per cent, down from 6.8-7.0 per cent.
One-year CDs were dealt at 6.8-7.0 per cent as against 6.7-6.9 per cent on Wednesday.
National Housing Bank today placed three-month CPs worth Rs 150 crore at 6.1 per cent.
