Corporates are increasingly tapping the corporate bond repo market to meet short-term funding requirements and to diversify their funding sources.
According to the AMC Repo Clearing Ltd (ARCL) data, companies borrowed an average of Rs 12,196.57 crore in the second half of the year 2025 till November compared to Rs 3,022.83 crore in the first half. ARCL, which is regulated by both Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI), offers clearing and settlement services to all trades executed on exchanges under triparty repo in corporate debt securities.
The corporate share in total volumes has risen to an average of 19.2% in the same period, up from 8.3% in January-June.
Cost Advantage
“Corporates are tapping the market because they are able to generate short-term liquidity against their investment in the corporate bonds. Also, they are getting the low-cost funding at 15-20 basis points (bps) above G-Sec repo market,” said Kashinath Katakdhond, managing director at AMC Repo Clearing.
This lowers their overall funding costs, while frequent rollovers provide more confidence to tap the market repeatedly, he added.
Corporates have increased their investments in corporate bonds to capitalise on their higher yields relative to G-Secs. This strategy also enables them to generate short-term liquidity by leveraging these holdings.
Expanding the Net
“Corporates whose net worth currently do not meet our requirements have been requesting to lower the net worth thresholds to enable broader participation. Our goal is to expand the participant base and we are exploring this internally. The risk management committee and the governing board will take a call on the eligibility criteria for expanding the participant base for the growth of corporate bond repo market in India,” said Katakdhond. Currently, corporates below Rs 5,000 crore of net worth are not permitted to participate in the corporate bond repo market.
The total volume on ARCL tri-party repo in November was Rs 67,732.50 crore compared to Rs 70,449.90 crore in October and Rs 62,903.15 crore in September. The monthly volume has grown three-fold in the past one year.