Indian companies have garnered over Rs. 29,000 crore by issuing non-convertible debentures (NCDs) to retail investors in the current fiscal so far.
In the entire 2015-16, firms had mobilised Rs. 38,812 crore through the route.
The funds have been raised for funding expansion plans, retiring debt, supporting 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 the Securities and Exchange Board of India (SEBI), companies have raised funds totalling Rs. 29,033 crore through retail issuance of NCDs during the current fiscal (till January 20).
In terms of number, funds were raised through 13 issues this fiscal so far against 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 per cent to 5 per cent. These factors contributed tremendously to capital raising via debt route,” he added.
During the current fiscal, three firms — Dewan Housing Finance Corporation, Muthoot Finance and Kosammattam Finance — took the NCD route twice to mobilise capital.
Individually, Dewan Housing Finance raised Rs. 14,000 crore through this route in the ongoing financial year.