RBI Policy
Large cos relying more on mkt, less on banks to source funds
This story was originally published at 13:29 IST on 6 August 2025
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MUMBAI – Large Indian corporates are increasingly relying on market-based instruments such as commercial paper and corporate bonds to source funds, reducing their reliance on bank credit, Reserve Bank of India Governor Sanjay Malhotra said while detailing the outcome of the Monetary Policy Committee meeting on Wednesday.
The total flow of resources from non-banks increased to INR 16.8 trillion in 2024-25 (Apr-Mar) from INR 12.5 trillion in FY24 while the pace of bank credit to the industry slowed, data from the RBI showed. Bank credit recorded a growth of 9.8% as on Jul. 11 compared to 14.0% a year ago.
Despite the slowdown in bank credit, the total flow of financial resources remained at almost similar levels in the current financial year compared to the corresponding period of last year. Issuances of commercial papers by non-financial entities increased to INR 780 billion in Apr-Jun, compared to INR 300 billion a year ago. Corporate bonds issued by non-financial entities increased to INR 950 billion in the same period compared to INR 90 billion a year ago.
The comfortable liquidity in the banking system has reinforced transmission of the policy repo rate cuts to the money, bond and credit markets during the current easing cycle. In the credit market, the weighted average lending rate of scheduled commercial banks declined by 71 basis points for fresh rupee loans and by 39 bps for outstanding rupee loans from February to June. On the deposit side, the weighted average domestic term deposit rate on fresh deposits moderated by 87 bps during the same period. "...the transmission to lending rates has been broad based across sectors," the governor said. End
Reported by Kabir Sharma
Edited by Ashish Shirke
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