IPO frenzy drives borrowing through commercial papers, shows data

The amount raised through such issuances was Rs 21.9 trillion in 2021, 49% higher than the previous year

The rush for taking loans to subscribe to initial public offerings (IPOs) has spurred borrowing through commercial papers (CPs) by non-banking financial companies (NBFCs).

The amount raised through CP issuances in 2021 stood at Rs 21.9 trillion, 49 per cent higher than the previous year and the highest since 2017, since when data is available. More than a third, or 37 per cent, of the CPs issued last year had a tenure of 1-2 weeks, which corresponds to the lending period for IPO financing, which is typically 7-10 days, the data from primedatabase.com shows.

Sixty-three firms collectively raised Rs 1.2 trillion by