Reserve Bank of India (RBI) Governor Sanjay Malhotra delivers the monetary policy statement, Wednesday | Photocredit: RBI Youtube via PTI Photo
Corporates increasingly rely on the bond market to raise funds, because the transfer of policy interest reductions is faster in the money market compared to banks, said reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday during the announcement of the policy rates.
He said that this trend has become more visible, because large companies now choose to raise money through market -based instruments such as commercial papers and corporate bonds, rather than mainly dependent on bank credit. The governor stated: “Because the transfer to money markets has been faster, large corporates increasingly relied on market -based instruments such as commercial paper and corporate bonds to sources for funds”.
According to the RBI data, the bank credit grew by 12.1 percent during the financial year 2024-25, which is slower than the 16.3 percent registered in 2023-24. But it is still higher than the average growth of 10.3 percent seen in the last ten years before 2024-25.
The flow of non-food bank credit, however, fell by £ 3.4 Lakh Crore, from £ 21.4 Lakh Crore in 2023-24 to about £ 18 Lakh Crore in 2024-25. Despite this fall, the total available financial resources for the commercial sector has actually increased. This is because the flow of funds from non-banking sources that formed the credit of the lower bank.
In fact, the total stream of financial resources increased to the commercial sector of £ 33.9 Lakh Crore in 2023-24 to £ 34.8 Lakh Crore in 2024-25. This upward trend will also take place in the current financial year. Many large companies have also seen their profit rise, which means that they also use their own internal resources to finance the growth of business affairs.
Data shows that CP (commercial paper) issues due to non-financial entities rose sharply to £ 0.78 Lakh Crore in 2025-26 (until June), from £ 0.30 Lakh Crore a year ago.
Commercial paper is an unsecured money market instrument that was published in the form of a promotion. Likewise, corporate bonds issued by non-financial entities significantly increased to £ 0.95 Lakh Crore of only £ 0.09 Lakh Crore in the same period last year. This shift shows how companies are investigating new ways to efficiently raise money, use market -based instruments and higher internal savings. The above data and points prove that companies use market -based loans, especially because it offers lower costs, faster rate adjustments and more flexibility.
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Published on August 6, 2025
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