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Companies Shift To Bank Loans As Bond Costs Rise Drives 81 Percent Fresh Credit Share
M
Moneycontrol•14-10-2026, 15:53
Companies Shift To Bank Loans As Bond Costs Rise Drives 81 Percent Fresh Credit Share
- •Indian companies are increasingly choosing bank loans over bonds due to rising borrowing costs, capturing 81 percent of fresh credit from November 2025 to August 2026.
- •Bank credit growth accelerated to 18 percent year-on-year in August, significantly outpacing the 10 percent growth seen in non-bank credit sources.
- •Sectors such as non-banking financial companies, wholesale trade, power, chemicals, and commercial real estate drove the stronger demand for bank loans.
- •Jefferies expects bank credit growth to moderate starting December 2026 or January 2027 due to a higher comparison base and potentially easing bond market conditions.
Key Questions Answered
Banks accounted for 81 per cent of fresh credit between November 2025 and August 2026 as companies shifted away from more expensive bond borrowings.
Sectors witnessing stronger demand for bank loans include non-banking financial companies, wholesale trade, commercial real estate, power, and chemicals.
Jefferies expects bank credit growth to moderate starting in December 2026 or January 2027 due to a higher comparison base and easing financing conditions.
