Federal Bank’s corporate loan book is expected to remain little muted and grow in the range of 8-10 percent in the current financial year on uncertainty over the US tariffs and cheaper funds available for the corporates at bond market, said managing director and chief executive officer, KVS Manian on August 2.
“Credit demand from corporates to remain little weaker in FY26,” Manian during the post earnings press conference.
According to the investor presentation of the bank, corporate loan book of the bank increased by 6 percent on-year to Rs 83,680 crore in Q1FY26, from Rs 79,208 crore in a year ago period, and Rs 83,680 crore in a quarter ago period.
The corporate loan book has 34 percent share of the gross advances in the April-June quarter.
After the start of the rate cut cycle by the Reserve Bank of India (RBI), corporates have seen tapping the bond market to avail funds at cheaper rates and reduce the borrowing cost on the book.
The central bank, since February this year has reduced key repo rate by 100 basis points (Bps), which led to over 50-60 bps fall in rates on the corporate bonds and commercial papers.
Further, the announcement of the tariffs by the US President Donald Trump may hamper the borrowing by the corporates from banks as these lenders may become cautious in lending in such environment.
Earlier this week, Trump announced a 25 percent tariff on Indian goods and an additional but unspecified penalty for buying Russian oil and arms.
While announcing the tariff and Russia penalty on July 30, Trump described India as America's "friend" but added it would face 25 percent tariffs plus a penalty for buying Russian military equipment and oil. The US President reiterated that India has among the "highest tariffs in the world".
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