Indian companies have raised close to Rs 27,000 crore by issuing non-convertible debentures (NCDs) to retail investors in the current fiscal so far to meet their business needs.
In the entire 2015-16, firms had mobilised Rs 38,812 crore through the route.
The funds have been raised for expansion plans, to support working capital requirements and other general corporate purposes.
NCDs are loan-linked bonds that cannot be converted into stock and usually offer higher interest rates than convertible debentures.
According to the latest data with Securities and Exchange Board of India (Sebi), companies have raised funds totalling Rs 26,965 crore through retail issuance of NCDs during the current fiscal (till January 6).
In terms of number, funds were raised through 11 issuance as compared to 20 in the entire 2015-16.
"Fund raising from capital markets is a function of cost and availability of capital. High volatility, weak sentiments in equity markets and lower cost for raising funds via debt encouraged firms to raise capital through private and public bond issues instead of equity issues," Bajaj Capital Senior VP and Head (Investment Analytics) Alok Agarwala said.
"At the same time, there were many regulatory initiatives for deepening Indian bond markets such as banks being allowed to issue Additional Tier 1 Bonds to meet their capital requirement, investment limit for Foreign Portfolio Investors being increased and withholding tax rate being reduced from 20 percent to 5 percent. These factors contributed tremendously to capital raising via debt route," he added.
During the current fiscal, two firms -- Dewan Housing Finance Corporation Ltd and Kosammattam Finance -- took the NCD route twice to mobilise capital.
Individually, Indiabulls Housing Finance raised Rs 7,000 crore against a target of Rs 3,500 crore and Mahindra & Mahindra Financial Services mopped up Rs 1,000 crore against a base size of Rs 250 crore.
Edelweiss Housing Finance and Muthoot Finance garnered Rs 500 crore each against a target of Rs 250 crore.
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