Issuances of short-term money market instruments fell today because mutual funds — the major investors for such papers —were not keen on investing due to low rates, dealers said.
“The rates have fallen significantly and so there is not much incentive for us to invest at such rates,” said a fund manager at a mutual fund.
Banks too are not keen on issuing CDs as the liquidity in the banking system is still abundant. Banks have been placing over Rs 1 lakh crore in Reserve Bank of India’s daily reverse repo window since April.
The three-month certificates of deposit were today quoted at 3.15-3.45 per cent today, unchanged from Wednesday. Three-month commercial papers were quoted at 3.50-3.70 per cent today, unchanged from Wednesday.
Today, UCO Bank placed Rs 400 crore of one-year CDs at 5.50 per cent.
