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The RBI Bulletin indicates that the resurgence of overseas fundraising by Indian companies signifies changing trends in the domestic credit market.

The RBI Bulletin indicates that the resurgence of overseas fundraising by Indian companies signifies changing trends in the domestic credit market.

Indian firms are increasingly seeking funds in international markets due to greater interest from global investors, better liquidity conditions, and lower hedging costs. This trend was highlighted by the Reserve Bank of India (RBI) in its latest monthly bulletin released on Monday.

The RBI added that this trend signifies a notable resurgence in external borrowing, reflecting the changing dynamics of the domestic credit market.

The Reserve Bank of India (RBI) noted that banks plan to raise around Rs 40,000 crore in equity funds through qualified institutional placements in the latter half of the fiscal year to bolster their balance sheets and support capital growth.

To meet rising corporate funding demands, many banks and non-banking financial companies (NBFCs) are diversifying their funding sources, particularly through foreign bond issuances. The offshore syndicated loan market is gaining traction as companies anticipate a rate-cutting cycle. Both existing and new borrowers are making significant issuances.

In the June 2024 quarter, banks have focused on raising funds via certificates of deposit, high-value savings accounts, and fixed deposits. However, the low share of low-cost current and saving deposits might limit their ability to raise funds domestically through high-cost options, potentially impacting net margins and aligning loan growth more closely with deposit growth. Emerging stress in unsecured loan segments, especially in personal loans and credit card portfolios, may also influence this shift in behavior.

The RBI Bulletin indicates that the resurgence of overseas fundraising by Indian companies signifies changing trends in the domestic credit market.

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