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Outstanding CDs fell to ₹5.60 lakh crore as of September 15 from about ₹6.90 lakh crore in mid-August, a decline of ₹1.306 lakh crore, according to RBI data. In the latest fortnight alone, outstanding CDs dropped by ₹76,400 crore, while year-on-year growth slowed sharply to 11.5% from 28.4% at the end of August. The retreat from CDs follows a surge in banking-system liquidity after banks raised foreign currency deposits under the FCNR (B) swap window. System liquidity peaked at around ₹11.2 lakh crore in early September, as banks exchanged dollars raised overseas with the RBI for rupees. The surplus reduced the need to tap short-term wholesale funding and allowed banks to let maturing CDs run off. Read more: Sebi to partly reverse derivative settlement rules after pushback: Report "With ample funds in hand, banks cut back on certificates of deposit issuance, and the call rate fell to 4.97%," said Vineet Jain, senior director, BFSI, Care Ratings. "This cost advantage is unlikely to last. Short-term rates have already begun to rise as the market prices in a possible rate hike at the October review. The RBI has also started to absorb the extra cash by selling government bonds." The easing in funding pressure is showing up in pricing as well. While fresh CD issuance recovered to ₹39,900 crore from ₹19,500 crore in the previous period, the lower end of issuance rates fell to 5.57% from 6.24%. The upper end remained broadly unchanged at 7.18%, widening the spread between issuers. Read more: PTC shares soar nearly 34% after Schneider Electric agrees to $22.6 billion buyout "CD rates have fallen sharply, with even 12-month CD rates now about 60 basis points lower than on June 1. This reduces the incremental funding cost on CDs as well as non-retail term deposits, which should support bank profitability while also improving liquidity coverage ratios and increasing the pool of deposits available for lending," said Prateek Ancha of Axis Securities. A basis point is a hundredth of a percentage point. "The shift is playing out differently for borrowers," said Prakash Agarwal, partner, Geofin Capital. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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