Corporates favouring commercial papers over bank loans, says SBI chairman Setty

CS Shetty, Chairman, SBI

State Bank of India (SBI) Chairman CS Setty on August 8 said corporates are moving towards commercial papers (CP) to replace working capital limits from banks, muting growth in the corporate loans.

“We have seen that utilization of working capital limits, which was 62 percent Q1FY25, has come down to 58 percent now. We have also seen that some large corporates are accessing the CP market, basically to replace the working capital limits,” Setty said at the post-earnings press conference on August 8.

In the June quarter, corporate loans grew 5.7 percent on-year to Rs 12.03 lakh crore.

Corporates ramped up short-term fundraising through CPs in the first quarter of FY26, with issuances jumping nearly 20 percent year-on-year.

According Clearing Corporation of India (CCIL) data, corporate CP issuances stood at Rs 4.54 lakh crore in Q1, up from Rs 3.81 lakh crore in Q1FY25, rising 20 percent year-on-year. On a sequential basis, fundraising rose by around 4 percent from Rs 4.39 lakh crore in Q4FY25.

The sharp fall in interest rates made CPs an attractive option for corporates looking to manage working capital and refinance short-term obligations at lower costs.

Setty added that CP market has seen a diversified participation from banks and mutual funds.

Once rates stabilise on the bank side, they may move back to bank credit, he said.

The country’s largest bank reported a 12 percent rise in net profit at Rs 19,160 crore for the June quarter, beating estimates. A Moneycontrol poll had pegged the bottom line at Rs 17,166 crore.