Corporate Bond Market’s Lowest Growth Rate Fuels Concern

India Inc still depend on banks for credit

There is yet another sign that India’s push to quickly expand its corporate debt market is faltering, as borrowers turn more to banks already struggling with one of the world’s worst bad debt ratios.

India’s bond market remains small compared with other major economies, frustrating policy makers who champion it as a way of diffusing credit risks that have stacked up at banks.

Slow growth

While the amount of outstanding rupee corporate notes, excluding banks, has been expanding for years, the pace of growth has generally been slowing since 2017 and marked its lowest rate in over a decade in May at 9.7 per cent, according to a Bloomberg Economics index. In contrast, bank lending grew 12.7 per cent in the twelve months through May 24, Reserve Bank of India (RBI) data show.

Risks in India’s credit markets resurfaced earlier this month after a lender delayed bond interest payments, adding to worries for investors who have been on edge since infrastructure financier IL&FS Group defaulted for the first time last year.

Source: The Hindu BusinessLine

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