IndusInd Bank’s ₹14,750 Crore CD Fundraise and Liquidity Stress
Why in the news
With system liquidity tight, IndusInd Bank turned to certificates of deposit (CDs) to fill cash gaps, and a large public sector bank took up more than half of the money.
Key facts
- IndusInd garnered ₹14,750 crore via CDs in the week, including ₹1,000 crore on Thursday at 7.9%.
- PNB mopped up ₹4,950 crore across maturities.
- Smaller lenders paid more: CSB Bank offered 8.5% on one-year CDs for ₹100 crore.
- Record CD issuance: ₹10.58 trillion, up 34% (RBI data).
- RBI support: about ₹5.5 trillion infused; it called IndusInd sound but under close watch.
| Issuer, March 20 | Tenor | Yield |
|---|---|---|
| PNB (₹4,950 cr) | 3 and 12 months | About 7.56% |
| IndusInd (₹1,000 cr) | 6 months | 7.90% |
| J&K Bank (₹275 cr) | 3 months | 7.75% |
| Utkarsh SFB (₹50 cr) | 3 months | 8.05% |
IndusInd concerns
- Discrepancies in its derivatives book may cut net worth by 2.35% (about ₹2,000 crore).
- LCR fell from 118% in December to 113% on March 9; the floor is 100%.
Exam angle
- CD: short-term deposit instrument issued by banks.
- Terms: LCR, OMO, VRR.