Why Indian firms are ditching bank loans for bonds
India's big companies are moving away from bank loans and turning to corporate bonds for funding.
In the first quarter of FY25 (April-June 2025), bond issuances soared to ₹3.27 lakh crore—the highest in four years.
The main draw? Bonds offer lower interest rates, ranging around 7.3%, while banks typically charge around 9.8%.
Real estate firms lead the charge
This shift is especially helpful for real estate firms, who now use tools like non-convertible debentures and securitization to cut costs and get easier access to money.
Companies with solid reputations and stable cash flows are also getting better deals as lenders reward good governance.
With more sectors exploring these options, India's corporate financing scene is quickly diversifying beyond old-school bank loans.