Indian banks to rely on certificates of deposit to fund year-end credit demand, officials say

Indian banks are increasingly turning to certificates of deposit (CDs) to meet the surge in credit demand towards the end of the financial year. CDs are short-term debt instruments issued by banks to raise funds from the market. This trend is driven by the need to manage liquidity and ensure adequate funding for lending activities. Bank officials have indicated that the reliance on CDs is expected to grow as banks seek to balance their funding requirements with regulatory constraints. The use of CDs provides banks with a flexible and cost-effective means of raising short-term capital. This strategy is particularly important in the context of rising credit demand and the need to maintain liquidity buffers. The increased issuance of CDs is also expected to offer attractive investment options for institutional investors seeking short-term returns.