Core Insights - The total flow of financial resources to the corporate sector increased to ₹35 lakh crore in FY25, reflecting a 3% rise from the previous year, but indicating a shift away from traditional bank credit, which suggests a broader economic slowdown [1][10] Funding Composition - Nearly 49% of the total resources raised, amounting to ₹17.1 lakh crore, came from non-bank channels, including corporate bonds, NBFC loans, equity issuances, and foreign direct investment [2][10] - Demand for bank credit declined by 14% to ₹17.9 lakh crore, highlighting a significant shift in funding sources [10] Equity Market Performance - Non-financial corporates raised ₹3.8 lakh crore through equity in FY25, marking a substantial increase of 188% compared to the previous year, driven by strong equity market performance [2][10] Lending Trends - The slowdown in bank credit may be attributed to cautious lending practices towards NBFCs and unsecured retail segments, as well as a high base effect from FY24 when bank credit surged by 20% [6][10] - NBFCs and financial institutions increased their lending to corporates, disbursing ₹6.1 lakh crore, which is a 20% rise [6][10] - Borrowings through corporate bonds and commercial papers by non-bank entities rose by 15% to ₹2.1 lakh crore [6][10] Internal Funding Sources - The increased use of internal accruals for business expansion has contributed to the decline in bank credit, as profitability among large corporates has improved [8][10] Policy Response - To stimulate credit demand, the Reserve Bank of India (RBI) has reduced policy rates by 100 basis points since February, following a two-year pause, and ensured ample liquidity in the banking system [9][10]

Core Insights - The total flow of financial resources to the corporate sector increased to Rs 35 lakh crore in FY25, reflecting a 3% rise from the previous year, but indicates a shift away from traditional bank credit [1][5] - Nearly 49% of the total funding, amounting to Rs 17.1 lakh crore, was sourced from non-bank channels, including corporate bonds, NBFC loans, equity issuances, and foreign direct investment [1][5] - Demand for bank credit fell by 14% to Rs 17.9 lakh crore, attributed to strong equity market performance encouraging companies to opt for share issuances over debt [2][5] Funding Composition - Non-financial corporates raised Rs 3.8 lakh crore through equity in FY25, marking a significant 188% increase compared to the previous year [3][5] - Lending from NBFCs and financial institutions to corporates rose by 20%, totaling Rs 6.1 lakh crore [3][5] - Borrowings through corporate bonds and commercial papers by non-bank entities increased by 15% to Rs 2.1 lakh crore [3][5] Economic Context - The decline in bank credit is also linked to larger corporates utilizing internal accruals for business expansion, as noted by RBI governor Sanjay Malhotra [5] - The overall flow of financial resources to the commercial sector has increased when considering non-bank sources, despite the slowdown in bank lending [5] - To stimulate credit demand, the RBI has reduced policy rates by 100 basis points since February and ensured ample liquidity in the banking system [5]

India Inc and Bond yields hardened in August with the yield on 10-year benchmark government dated stock rising 26 basis points (bps) 6.62% at the end of the month. Yields however softened from that level 6.46% last week.In April, the 10-year yield traded between 6.32% and 6.50%, compared with 6.58%-6.75% in March.The first quarter volume was seen at ₹4.54 lakh crore, as compared with ₹3.81 lakh crore in the year ago period.Live EventsBankers are hoping that India Inc will return to the banking fold for the ...