Banks' CD issuances may fall with improvement in liquidity

Banks have raised nearly 8.29 trillion via CDs in the AprilFebruary period

- SACHIN KUMAR

BANKS' EXUBERANCE TO issue certificates of deposit (CDs) is expected to moderate in the next financial year. The sharp growth in CD issuances witnessed this year may slow down due to increase in system liquidity and lower need for banks to raise funds as the credit growth, too, is likely to moderate in the next fiscal.

"With an improvement in system liquidity and slowing demand for credit, CD issuances incrementally will come down in the next financial year," Soumyajit Niyogi, director core analytical group, India Ratings and Research, told FE. "Banks will not be desperate to raise funds next year because credit growth is expected to decline."