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ICRA in its latest report has forecasted that the incremental credit flow in the Indian economy from the domestic sources to moderate to Rs 24.5 trillion in FY2025, from the all-time high achieved in FY2024. It expects the non-food bank credit (NFBC) to moderate slightly in FY2025 from the record-high seen in FY2024. However, bond issuances are expected to increase further in FY2025. As the interest rates are likely to remain elevated in developed markets, the domestic debt capital market would remain an attractive source of borrowings for large corporates.
Competitive funding conditions in domestic markets compared to developed markets meant that large corporates tapped more domestic funding sources over the last two years. Strong demand for loans from retail borrowers and non-bank finance companies (NBFCs) drove a significant portion of the incremental flow of credit from banks. This resulted in the highest ever NFBC expansion of Rs. 22.3 trillion in FY2024 far outpacing the incremental NFBC expansion of Rs. 18.2 trillion recorded in FY2023.
The incremental credit flow was also supported by the all-time high corporate bond issuances of Rs 10.2 trillion in FY2024, resulting in the stock of corporate bonds outstanding rising to an estimated Rs 46.0 trillion as on March 31, 2024, from Rs 43.1 trillion as on March 31, 2023. Besides, the stock of commercial papers (CPs) outstanding also rose by Rs 0.4 trillion in FY2024 to Rs 3.9 trillion as on March 31, 2024. Cumulatively, these three sources accounted for Rs 25.4 trillion of incremental credit flow in the domestic market, an all-time high.
The recent regulatory actions on unsecured retail loans, bank funding for NBFCs and tight liquidity in the banking system may constrain the incremental credit growth of banks. However, the yield on Indian Government Bonds (IGBs) is likely to remain range-bound, driven by demand from foreign portfolio flows upon inclusion of IGBs in global indices. This shall improve the competitiveness of funding from debt capital markets vis a vis bank borrowing and would drive up corporate bond issuances.
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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