Banks have raised Certificate of Deposit (CD) rates by over 20 basis points in October to meet the surge in credit demand during the festive season and tackle tight liquidity conditions. Rates for 6-month and 1-year CDs increased by 21 basis points, while 3-month CD rates went up by 26 basis points.
In October, banks issued CDs worth Rs 20,450 crore, significantly lower than September's Rs 73,856 crore. The liquidity deficit in the banking system has persisted since September 15 due to outflows from tax payments and GST settlements. On September 19, it peaked at nearly Rs 1.47 trillion, the highest since January 29, 2020.