NBFCs Lead Charge in March CP Market Amid Corporate Caution

Non-banking Financial Companies (NBFCs) drove commercial paper market activity in March due to keen funding needs, despite high borrowing costs. In contrast, corporates remained cautious. Issuances by banks through certificates of deposit followed a stable trend, suggesting easing funding pressure. The pattern reflects diverging financial strategies.

In March, Non-banking Financial Companies (NBFCs) led a significant drive in the commercial paper market, as corporates opted for caution amidst high short-term borrowing costs, according to a report by India Ratings and Research.

This pattern shows NBFCs actively engaging the CP market to meet funding needs, particularly during the fiscal year-end, while corporations prefer a prudent approach due to elevated costs and sufficient internal liquidity.

Issuances of certificates of deposit by banks depict a stable path, indicating some relief in short-term funding pressures. As deposit conditions stabilize, borrowing intensity may soften, aligning with improved liquidity forecasts.

(With inputs from agencies.)