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Banks cut CD borrowings by Rs 1.3 lakh crore in a month amid RBI liquidity boost

By Sohail Khan 6 October 2026, 6:04 am

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Business News›Markets›Forex›Forex News›Banks cut CD borrowings by Rs 1.3 lakh crore in a month amid RBI liquidity boost

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Banks cut CD borrowings by Rs 1.3 lakh crore in a month amid RBI liquidity boost
Synopsis

Indian banks significantly decreased the issuance of certificates of deposit, lowering outstanding amounts by ₹1.3 lakh crore. This change followed a boost in liquidity from the Reserve Bank of India's foreign currency deposit scheme. As a result, the need for short-term funding decreased, leading to lower call rates. Fresh CD issuance slightly increased, but rates fell notably, affecting overall funding costs.

Banks cut CD borrowings by Rs 1.3 lakh crore in a month amid RBI liquidity boost<br> — Outstanding CDs fell to ₹5.60 lakh crore as of September 15 from about ₹6.90 lakh crore in mid-August.

Mumbai: Indian banks have run down more than ₹1.3 lakh crore of certificates of deposit (CDs) in just a month, shrinking outstanding short-term market borrowings by 19% as liquidity created by the Reserve Bank of India's special foreign currency non-resident (bank) deposit window reduced their need for relatively expensive wholesale funding.

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.

"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.

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