Banks’ Certificate of Deposit (CD) Borrowings at Record High; ₹1.34 Trillion Raised

Banks raised ₹1.34 trillion through certificates of deposit (CDs) in the fortnight ended February 15, the highest amount raised in any such period, Reserve Bank of India data showed. 

News reports suggest that the outstanding CDs stood at ₹6.62 trillion during the period, compared with ₹4.93 trillion at the beginning of January. The rise over recent weeks shows higher dependence on short-term market borrowing. Since January, banks have issued nearly ₹2.4 trillion worth of CDs. For 2025 so far, total issuance has exceeded ₹12 trillion. 

Credit Growth Ahead of Deposits 

The increase in CD borrowing comes at a time when credit growth continues to run ahead of deposit growth. In the fortnight ended January 31, credit expanded 14.6% year-on-year, while deposits grew 12.5%, leaving a gap of nearly 200 basis points. 

During the same period, credit rose by ₹3.41 trillion, or 1.7%. Deposits increased by ₹3.82 trillion, or 1.6%. However, a portion of deposits is set aside towards statutory requirements such as the cash reserve ratio and statutory liquidity ratio, which limits the funds available for lending. 

Rates Remain Elevated 

Short-term borrowing costs in the CD market have remained firm. Rates during the recent period ranged between 5.25% and 7.48%, based on RBI data. 

Large private sector banks such as HDFC Bank and ICICI Bank raised funds at slightly above 6.8%. Several mid-sized private and public sector banks borrowed at 7% or more. Utkarsh Small Finance Bank accessed the market at rates as high as 7.9%. 

In late January, the RBI announced liquidity measures including open market operations, dollar-rupee buy-sell swaps and long-term variable rate repo operations. Short-term rates have not seen a material decline. 

Role of CDs 

CDs are negotiable money market instruments issued by banks with maturities ranging from 7 days to 1 year. Financial institutions can issue them for maturities between 1 and 3 years. 

Banks use CDs to manage short-term liquidity, address maturity gaps and supplement deposit funding. The latest figures indicate continued use of this route as credit demand remains steady. 

Read More: Reserve Bank of India Won’t Revisit Broker Funding Norms! 

Conclusion  

CD borrowings have risen sharply, with both issuance and outstanding stock touching fresh highs. The data indicates continued reliance on money market instruments for short-term funding. 

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