Corporate Debt to Break Another Record

The RBI's Monetary Policy Committee cut the repo rate by 25 basis points each in February and April

- Abirami Sekar

Corporate bond issuances are expected to scale another record in the current fiscal as Indian companies continue to raise funds at cheaper costs from the debt market, when banks are taking long to fully pass on lower policy rates to businesses.

Local companies are expected to raise over ₹11 trillion from the bond markets in FY25-26, according to sector experts. That compares with ₹9.95 trillion raised through public and private debt issues combined in FY25, according to the market regulator's data, implying an estimated annual rise of about 10.5% this fiscal.

"With the faster transmission of recent rate cuts in the debt capital market compared to bank lending rates, corporates have preferred to raise funds via bonds rather than borrow from banks," said Sachin Sachdeva, vice-president and sector head, financial sector ratings at Icra Ltd. This is also reflected in the muted incremental credit expansion by banks in Q1 of FY26, he said.

The Monetary Policy Committee of the Reserve Bank of India cut the repo rate by 25 basis points (bps) each in February and April. A 50 bps cut in June followed, leading to a 100 bps drop in the benchmark rate in five months.