Business · Economy · 3 hrs ago
One-year deposit rates at Indian public-sector banks rise above 8%
Indian public-sector banks have raised one-year certificate of deposit rates above 8% in recent days.
Banks issue these certificates to raise funds, and their rates help reflect the cost of short-term borrowing.
Tighter liquidity has increased banks’ demand for funds: the banking system’s average daily surplus fell to ₹2.3 lakh crore in October from ₹7.7 lakh crore in September.
Rates had been around 6.6% in August, when foreign-currency deposits had left banks with more funds available.
Higher Treasury-bill yields and expectations of policy rate increases are also pushing rates up, with the 364-day bill yield reaching 6.69%.
Banks increased certificate issuance as funding demand grew, from ₹19,505 crore in the fortnight ending August 31 to ₹74,607 crore by September 30, before easing to ₹45,781 crore by October 15.
A bank treasury head said rates may rise further, but no specific next move or timing was given.
One-year certificate of deposit rates at Indian public-sector banks have risen above 8% in recent days.
The increase comes amid tighter banking-system liquidity, higher Treasury-bill yields and expectations of policy-rate rises.
Banking-system liquidity averaged a surplus of ₹2.3 lakh crore in October, down from ₹7.7 lakh crore in September.
Banks issued ₹45,781 crore of certificates of deposit by October 15, after issuing ₹74,607 crore by September 30.
Treasury officials said volatile conditions mean certificate of deposit rates may rise further.
- Who
- Indian public-sector banks, which issue the certificates of deposit.
- What
- One-year certificate of deposit rates have risen above 8%.
- When
- In recent days, according to the article published November 3, 2026.
- Where
- India.
- Why
- Tighter liquidity, higher Treasury-bill yields and market expectations of policy-rate increases have pushed rates up.
This story does not have two clearly opposing sides.
Comparable certificate of deposit rates had fallen to around 6.6% as FCNR(B) inflows left banks with abundant liquidity.
Banks issued ₹19,505 crore of certificates of deposit in the fortnight ending on this date.
Certificate of deposit issuances had risen to ₹74,607 crore.
Banking-system liquidity averaged a surplus of ₹2.3 lakh crore, down from ₹7.7 lakh crore in September.
Certificate of deposit issuances stood at ₹45,781 crore.
One-year certificate of deposit rates at public-sector banks rose above 8%.
- One-year CD rates
- Above 8%
- October liquidity surplus
- ₹2.3 lakh crore daily average
- September liquidity surplus
- ₹7.7 lakh crore daily average
- 364-day Treasury-bill yield
- 6.69%
- CD issuances by September 30
- ₹74,607 crore
- CD issuances by October 15
- ₹45,781 crore
What people are saying
CD rates are amongst other things a function of the underlying risk-free rate, which is the equivalent tenor T-bill. Rates of T-bills shot up 20-25 bps at the last auction and additionally there is demand coming in because of the liquidity squeeze
The increase in short term rates is not in isolation with just a liquidity deficit, this is also a function of rate hikes being priced in. The rate trajectory is skewed to the upper side and markets are preparing for a rate hike
Things are volatile, so I can say with some certainty that this is not the peak of CD rates