With non-food credit having picked up in the second half of the year, bank loans have exceeded borrowings via corporate bonds and commercial paper (CP) in FY16, reports Bhavik Nair in Mumbai. Data from the Reserve Bank of India show net non-food credit for the last fiscal stood at Rs 4.10 lakh crore as of March 18, 2016.
However, bankers point out that a huge chunk of CPs appears to have been redeemed in the last month of the year. While outstanding CPs on March 15 stood at Rs 3.45 lakh crore, it was much smaller at Rs 2.6 lakh crore on March 31.
Bankers say companies may not have wanted to hold the debt on their books at the end of the year. Data from the central bank show that the net quantum of CPs issued during the fiscal was Rs 66,976 crore.
The year saw a slight dip in net corporate bond issuances at Rs 2.68 lakh crore, a 5% fall over the previous year, according to data from Securities and Exchange Board of India.
Nevertheless, the year saw a fair amount of disintermediation for the most part, with the bonds market hogging the action.
Shashikant Rathi, executive vice-president and head, investments, ALM and capital markets at Axis Bank, pointed out that by and large those companies that enjoy a rating above AA- have moved to the corporate bond market. “This is because the difference between the yields on corporate bonds and the base rates of banks has been anywhere in the range of 150-200 basis points,” he indicated.