India Inc is increasingly tapping the corporate bond repo market to meet short-term funding requirements at cheaper rates and diversify their funding sources. Data from AMC Repo Clearing (ARCL) showed that companies borrowed an average of Rs 12,196.57 crore in the second half of 2025 till November, compared with Rs 3,022.83 crore in the first half.
ARCL, which is regulated by both the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI), provides tri-party repo clearing and settlement services for all trades executed on exchanges for corporate debt securities.
The corporate share in total volumes has risen to an average of 19.2% during the same period, up from 8.3% in January-June. “Corporates are tapping the market because they can generate short-term liquidity against their investment in the corporate bonds. They are also getting the low-cost funding at 15-20 basis points (bps) above G-Sec repo market,” Kashinath Katakdhond, managing director at AMC Repo Clearing, said.
ARCL bond repo volume dips
The total volume on the ARCL Corporate Bond repo in November stood at Rs 67,732.50 crore, compared with Rs 70,449.90 crore in October and Rs 62,903.15 crore in September. The monthly volume has grown threefold in the past year.
Between December 5 and December 24, after the 25-basis point repo rate cut, corporates with AAA and AA + ratings have raised funds in the range of 5.29% to 5.9% in the corporate bond repo market. This is more than 100 bps below the AAA one-year corporate bond, trading at 6.83%. “This lowers their (corporates) overall funding costs while frequent rollovers provide more confidence to tap the market repeatedly,” Katakdhond added.
Higher yields spur corporate bond shift
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. This has also encouraged corporates with a net worth of less than Rs 5,000 crore, who are currently not allowed to tap the corporate bond repo market, to seek relaxations.
“Corporates whose net worth currently do not meet our requirements have been requesting to lower the net-worth thresholds to enable broader participation,” said Katakdhond. “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 the corporate bond repo market in India,” he added.