State-run firms taper debt fundraise on rate-cut hopes

₹14,735 cr raised against ₹24,800 cr plan as PFC, Nabard pull short-term bonds

- ANJALI KUMARI & SUBRATA PANDA

Small Industries Development Bank of India (Sidbi), PFC, Axis Bank, and Sundaram Finance together raised ₹14,735 crore in the domestic debt capital market on Tuesday, well below the roughly ₹25,000 crore that had been expected, after issuers including PFC and the National Bank for Agriculture and Rural Development (Nabard) pulled their short-term offerings.

The withdrawals were prompted by expectations of a repo rate cut at next month's Monetary Policy Committee (MPC) meeting, which could drive down short-term rates and make it more advantageous for issuers to raise funds later.

The softer issuance follows comments on Monday by Reserve Bank of India Governor Sanjay Malhotra, who said the scope for further rate cuts, signalled during the October policy meeting, had not narrowed, as suggested by the latest data. The yield on the 10-year benchmark government bond fell after his remarks.

His comments come a week ahead of the MPC’s six-member meeting, which begins on December 3. The policy decision will be announced on December 5.