Banks have boosted their holdings of rupee notes from companies to an all-time high. Total holdings of corporate bonds and commercial paper held by local banks surged to a record of almost 7 trillion rupees ($93 billion) in late May, data from the Reserve Bank of India this week show. The central bank extended a $50 billion emergency credit line to lenders in March to spur them to boost financing to companies squeezed by the pandemic and an economic contraction caused by steps to contain it.
Indian borrowers have been rushing bond deals to market in recent weeks, after government and central bank measures to support companies pushed the average yield on rupee notes to the lowest since 2004 earlier this month. Lower-rated companies have also benefited from those initiatives, with issuance from weaker names rising to a 15-month high in June, rebounding from a plunge in April and May.
With India’s central bank forecasting the economy will contract this fiscal year for the first time in more than four decades, the bond market also gives banks, wary of defaults, the ability to invest in the debt of top-rated companies.
RBI and Banks deploy close to Rs 8000 cr to ease Mutual Fund liquidity
Banks and the RBI have deployed close to Rs 8,000 crore to ease the liquidity pressure in the mutual fund industry in April and May.
The data compiled by the RBI shows banks deployed Rs 5,522 crore from their own resources under the Special Liquidity Facility for Mutual Funds (SLFMF) scheme for Rs 50,000 crore announced by the regulator. This is in addition to Rs 2,430 crore availed from the RBI under the SLF-MF scheme.
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