While bank credit to industry contracted for the seventh straight month in April, companies have been borrowing more in the bond and money markets in the last few months. Data released by Reserve Bank of India (RBI) showed loans to industry fell 1%, year-on-year (y-o-y) to Rs 24.94 lakh crore. In April 2016, credit disbursed was Rs 25.2 lakh crore, up 0.3%, y-o-y. The quantum of credit disbursed to industry has been falling consistently since August, last year, recovering only briefly in September to clock a 0.9% rise, as lower borrowing rates have lured corporate borrowers to the money markets. Money raised by corporates through bonds and commercial paper (CP) so far in 2017 added up to at least Rs 2.33 lakh crore, as against Rs 3.43 lakh crore disbursed by banks in non-food credit, as of May 12.  According to RBI data, the net issuance of CPs, as of May 15, stood at Rs 1.05 lakh crore, while data from the Securities and Exchange Board of India (Sebi) showed net corporate bond issuance during the quarter ended March stood at Rs 1.28 lakh crore. The numbers indicate the gap between borrowings from the money markets and those from banks narrowed nearly 80% over the corresponding period in 2016; while companies raised Rs 1.77 lakh crore through bonds and CPs, non-food credit disbursals stood at Rs 2.38 lakh crore.

According to data from Bloomberg, a total of Rs 2.68 lakh crore has been raised by Indian companies between January and May this year, of which Rs 1.95 lakh crore was raised by banks and other financial institutions and Rs 63,373.5 crore by non-financial firms. The largest non-financial issuers were Power Grid Corp of India, which raised Rs 2,060 crore, NTPC and Idea Cellular, each of whom raised Rs 2,000 crore, and Welspun Renewables and Tata International, who raised Rs 1,200 crore each.

The month of April saw credit deployment in industry falling across categories – 9.1% in the medium segment, 0.7% in large industry and 0.5% in the micro and small segment.