Mumbai, Nov 23 (LatestNewsX) – The Reserve Bank of India reports that Indian financial institutions have upped their use of Certificates of Deposit (CDs) dramatically, reaching almost Rs 55 000 crore in the two‑week period ending on 14 November. This is the highest fortnightly figure since mid‑September.
The rise in CD activity mirrors a sharp increase in loan demand, which keeps outpacing the slow growth in deposits. In just the first half of November 2025, banks issued twice as many CDs as they did in the preceding two fortnights. The credit‑to‑deposit ratio in the banking system has now crossed the 80 % mark for the first time, standing at 80.47 % as of 31 October 2025. In other words, banks are lending out a substantial share of the money they hold and turning to alternative funding channels.
With deposit growth ticking in single digits and credit expansion booming in double‑digit territory, banks are leaning heavily on market borrowings such as CDs to satisfy the ongoing loan appetite. A key driver behind the jump in CD issuance was the recent drop in short‑term borrowing rates. After the RBI announced lower‑than‑expected cut‑off yields at a treasury‑bill auction, CD issuances became more attractive to investors.
Specifically, the RBI set the cut‑off yield for the 91‑day T‑bill at 5.38 %, which fell short of market forecasts, prompting banks to ramp up their certificates of deposit. Mutual funds have also shown strong appetite for CDs, reinforcing banks’ confidence in this instrument.
Analysts predict that banks will continue to tap CDs to meet year‑end credit demand, especially during the festive season when retail sales surge. CDs are negotiable money‑market instruments issued by banks with maturities ranging from a minimum of seven days to a maximum of one year. They provide a cost‑effective alternative to bulk term deposits, helping banks contribute to their overall deposit base, manage maturing deposits, and maintain smoother liquidity flows.
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