The issue of deposit certificate (CD) has fallen sharply in recent months and forced investment funds to explore alternative money market instruments such as treasury accounts and commercial papers to park their money.
The net CD issue fell 84 percent to £ 13,000 crore in the quarter of June against £ 85,299 crore logged in the quarter of March, according to data from Bandhan Mutual Fund.
The slide took place to £ 2,855 crore or 6 percent in July with new issues at £ 46,805 crore and aged at £ 49,660 crore. Likewise, it fell £ 19,585 Crore or 21 percent in August with a new issue at £ 71.68.5 crore and matured at £ 91,270 crore.
The decrease in CD issues was largely due to bank deposits that grew faster than credit decrease, which reduces the need for short-term loans by banks.
At the end of August, the credit started by 10 percent on an annual basis to £ 186 Lakh Crore. However, growth is considerably lower in comparison with 15 percent growth that was recorded last year.
In the same period, deposits rose by 10 percent yoj to £ 235 Lakh Crore, against 11 percent registered in the previous year. The credit deposit ratio remained flat at 79.3 percent successively and remained under 80 percent for the 11th consecutive fourteen days.
The recent delay in the growth of both deposits and credit has been cited as one of the main reasons for the fall in CD spending, a banker said.
Abhishek Bisen, Fund Manager Running, Kotak Mutual Fund said that investment funds increase their exposure in CPS (commercial papers) and T-Bills (Treasury Bills) to maintain the required exposure in money market instruments in accordance with the objective of the schedule and the display of schedule.
MFS are the biggest investors in CD as a category and its issue depends on the down payment and credit growth, he said.
With the recent reduction in CRR (Cash Reserve Ration) with 100 basic points in June Monetary policy (which should be done in four tranches with the first 25 BPS in September), the banking system -Liquidity supported positively, Bisen said.
Moreover, the GST rationalization that will take effect from this month will use it in the future, he added.
Brijesh Shah, Senior Vice President – Fixed Income, Bandhan AMC said that the higher supply of Commercial Paper (CP) has been facilitated to a extent in building the investment book, but in general the demand disease of demand has been an important factor in credit and termridity cumpit.
The delay in the credit and deposit group is one of the main reasons for the general decrease in the issue of CD, he said.
Published on September 13, 2025
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