Corp loans on slow lane as firms tap bonds, stock sale

Indian companies borrowed less from banks in FY25 and turned instead to alternate fundraising sources such as corporate bonds and equity, showed recent data released by the Reserve Bank of India (RBI).

- Shayan Ghosh

Bank loans, which are typically the biggest source of corporate funding, fell 16% year-on-year (yo-y) to ₹17.9 lakh crore in FY25.

Alongside, equity issuances took off, with non-financial companies raising ₹3.8 lakh crore, against ₹1.4 lakh crore in FY24. While domestic non-bank sources saw 35% growth, foreign sources of funding witnessed 33.5% growth in FY25.

That apart, corporate bond issuances by non-financial companies rose 18% to ₹9 lakh crore in FY25.

However, overall money raised by companies in FY25—₹35 lakh crore—grew at 3%, the slowest pace in five years, compared with 17-34% growth in the past four years, according to the central bank's data.

“The slowdown in credit demand from the commercial sector reflects the broader challenges currently faced by Indian corporates,” said Prakash Agarwal, a partner at debt market advisory firm Gefion Capital Advisors.