Indian companies prefer commercial paper route to raise cash, shun banks

Rs 1.9 trn of short-term debt issued in September, against Rs 1.3 trillion in August

Indian companies are increasingly preferring the commercial paper (CP) route to raise working capital, while shunning banks. And this is only going to increase with the liquidity-supportive measures announced by the Reserve Bank of India (RBI), say experts. 

Issues of CPs — those that mature in less than a year —have increased since the nationwide lockdown was announced in March-end, but corporate bonds have not seen such a commensurate rise even as banks’ incremental lending continues to fall.

The data released by the RBI last week showed banks’ loan growth to the industry segment was nil in September. But, on a year-on-year