New Delhi, Nov 16 Corporate bond issuances increased 8 per cent year-on-year (YoY) to Rs 6.3 lakh crore till October this fiscal (FY26) from 5.8 lakh crore in the same period a year ago (FY25), SBI research said in its report on Sunday.
Meanwhile, commercial papers (CP) issuances also increased by 13 per cent YoY to Rs 9.8 lakh crore during the same period, as compared to Rs 8.6 lakh crore.
All scheduled commercial banks (ASCB bank) credit also increased 16 per cent YoY during FY26 (till October), while on a year-to-date (YTD) basis, the credit growth has been 6.3 per cent.
On the deposit front, according to the report, the YoY growth during FY26 (till October) is 2.6 per cent, while on a YTD basis, deposit growth has been 7.1 per cent, according to the report.
Bank credit growth was 11.3 per cent for the fortnight ended 31 Oct, while deposit growth increased to 9.7 per cent from 9.5 per cent during the same period.
The green shoots of growth in credit against lagging deposit growth call for more proactive liquidity management.
The spread between the 10-year AAA corporate bond and the government security (G-sec) has been falling since August. But for the 5-year bond, the spread with G-sec actually rose in October.
Similarly, the gap between the Repo rate and the weighted average rate of Commercial Paper (CP), which was negative in FY21, went up to 114 bps in FY25 and now stands at 90 bps in October.
In the same way, the spread between the Repo rate and 3-month Certificates of Deposit (CD) — also negative in FY21 — increased to about 83 bps in FY25 and is now 45 bps in October, the report noted.
Mutual Funds witnessed a gush of liquidity in short-term instruments during the last month, totalling Rs 1.33 lakh crore, a reversal of fortunes after a big outflow in September and a somewhat negative August before that, indicating flows are preferring short-termism.
The report highlighted that FPIs have been cautious on emerging markets in general, lately, as pangs of volatility rocked the flow of capital and investments.
"However, the flows in various debt segments have bucked the trend and remained in positive terrains for most months, vindicating their trust in GoI’s macro fundamentals and reforms being ushered in," the SBI Research said.
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