India Inc. looks past banks for credit, turn to bonds and commercial papers

Absolute outstanding bank credit amount of large enterprises declined 32.67% from March-end to July-end this year

Indian companies seeking loans shifted from banks to corporate bonds and commercial papers in the first quarter of the financial year (Q1 FY26): a period of low interest rates. 

 

At the outset, it may seem that bank credit is preferable due to lower cost of bank credit in such a low interest-rate regime. However, the spread between interest rates and corporate bond yields have shrunk, prompting industry to prefer the latter, said Soumya Kanti Ghosh, group chief economic advisor at State Bank of India.

 

Credit to India Inc stood at Rs 10.8 trillion in the quarter. As much as Rs