Debt markets in July 2020 were marked by a broad-based decline in cost of funds and a divergent trend in borrowings by the government and the corporate. Central government borrowing through short-term securities as well as dated securities rose in July'20 compared to the previous month while their cost of borrowing eased to over 3-year low.
In July 2020, the short-term borrowings by the central government through treasury bills (T-bills) amounted to Rs 1.75 lakh crore, more than double of Rs 80,000 crore accepted in July 2019. It was however Rs 5,000 crore less than the borrowings of June 2020.
Borrowings through states-issued State Development Loans (SDLs) amounted to Rs 47,600 crore in July 2020, which was considerably less than the borrowings of Rs 60,071 crore in the previous month. It was 6 per cent lower than Rs 50,606 crore in July 2019.
Issuance of corporate bonds and commercial papers was lower than a month ago. Also, the borrowings from overseas markets in the first quarter of the current financial year have been significantly lower (70 per cent) than in the same period of 2019-20 despite low interest rates in external markets.
Commercial paper issuances (as per RBI) in July 2020 aggregated Rs 91,338 crore, 55 per cent lower than corresponding period last year. On m-o-m, the funds raised in July 2020 were 26.9 per cent lower. For the first four months, the issuances aggregated Rs 4.6 lakh crore, 44 per cent lower than corresponding period last year. The decline so far this year can be attributed to the pandemic led lockdown.
Bank credit growth (incremental) further contracted during the month. As on July 2020, the outstanding aggregate bank credit amounted to Rs 102.1 lakh crore, Rs 1.51 lakh crore lower than end-March 2020.
Story: Shivani Sharma
Design: Pragati Srivastava