India Inc lukewarm to bank loans

This is despite corporate bond yields hardening by 20-25 basis points

- SUBRATA PANDA

Despite corporate bond yields hardening by 20-25 basis points, Indian corporates are not warming up to bank funding for their capital expenditure needs as bank lending rates remain elevated due to the higher cost of liabilities, compared to current rates in the debt capital market.

Additionally, the large cash reserves held by corporates are sufficient to meet their immediate funding requirements, banking industry and debt market participants said.

The primary bond market, after a buoyant first quarter, has lost momentum. Since July, issuance volumes have fallen sharply as a series of negative headlines pushed yields higher by 20-25 basis points. This sudden spike has kept many issuers on the sidelines, adopting a wait-and-watch stance. Since the start of July, the 10-year government securities yield has moved from 6.3 percent levels to around 6.6 per cent at the end of August.

According to data from PrimeDatabase, in July and August, Indian companies have raised a little over ₹1.19 trillion from the domestic debt capital market compared to over ₹3.42 trillion in the April-June quarter of FY26.

In July, the companies raised ₹69,125 crore via bonds while in August they raised ₹50,152 crore.