Fundraising by banks through Certificates of Deposit (CDs) surged 38 per cent year-on-year in June, driven by tighter liquidity conditions and robust credit growth.When compared to the preceding May, the CD issuances jumped 61.79 per cent.According to data compiled by PTI from the Clearing Corporation of India (CCIL), banks raised ₹1.80 lakh crore through CDs in June, compared with ₹1.12 lakh crore in May and ₹1.31 lakh crore in June 2025."CD issuances were driven by multiple factors such as liquidity deficit, good credit offtake, tax outflows and lagging deposit," said Alok Singh, group head treasury at CSB Bank.In the recently released Financial Stability Report, the RBI had flagged funding to be a key risk for banks going ahead.The surge in CD issuances was largely driven by five major public and private sector banks.HDFC Bank emerged as the largest issuer, raising ₹26,285 crore, followed by Bank of Baroda (₹24,125 crore), Union Bank of India (₹21,175 crore), Canara Bank (₹17,000 crore), and Axis Bank (₹16,360 crore). Together, these five banks mobilised ₹1.05 lakh crore, accounting for 58.25 per cent of the total CD issuances during the month."The stress on LCR and lagging deposit growth forced all the banks to secure deposits through the CD route. When bigger banks are in the market , their size commands a larger share," Singh said.The liquidity in the banking system has remained tight in June, especially after outflows on account of advance tax and goods and services tax.Systemic liquidity was in surplus mode between June 1 and June 21, but after that it turned deficit warranting the Reserve Bank of India (RBI) to intervene heavily and provide transient liquidity through Variable Rate Repo (VRR) auctions.The central bank infused ₹5,97,900 crore transient liquidity to the banking system through 13 VRR auctions of various tenures ranging between overnight and seven days.Further, the credit growth in the banking system has remained in double digit since September last year after the goods and services tax rationalisation by the central government.This resulted in rising demand for funds from banks amid lagging deposit growth. "Credit-Deposit Gap:Robust loan growth outpaced retail deposit mobilisation. Q1-End Pressures: Banks raised quick funds to meet regulatory ratios (LCR), reserve requirements, and offset temporary liquidity drains from tax/GST outflows," said Balasubramanian R, head of treasury at Dhanlaxmi Bank.Further, experts said that rates on these instruments hardened in early part of June amid higher demand for funds, but later eased on easing geopolitical tensions and RBI's transient liquidity infusion."The rates did spike up in early June following the higher demand, however, they eased in the second half of the month after the announcement of the FCNR scheme," Singh added.Published on July 3, 2026