Issuance of six-month certificates of deposit (CDs) by banks rose On Tuesday on rising demand from mutual funds for these papers, dealers said.
On Monday, Securities and Exchange Board of India introduced guidelines to reduce the tenure of debt securities held by cash plans of mutual funds.
From February 1, mutual funds have to invest inflows received in liquid and liquid plus schemes into debt securities having a tenure of up to 182 days. From May 1, they can invest in securities maturing up to 91 days only.
On Tuesday, banks placed around Rs 1,800 crore worth of six-month certificates of deposit.
Banks have already placed around Rs 15,000 crore of CDs in January. On Tuesday, the rates remained unchanged on sufficient demand from mutual funds. Three-month certificates of deposit were quoted at 6.25-6.45 per cent On Tuesday, unchanged from Monday.