Q1 bank credit flow surges 10x as market mop-up collapses
MUMBAI: A sharp collapse in capital market mobilisation pushed bank credit to the forefront of funding for the commercial sector in the first quarter of FY27, with non-food bank lending rising more than ten-fold and driving a surge in overall resource flows.The total flow of financial resources to the commercial sector rose to Rs 7,73,078 crore in Q1 FY27 from Rs 3,12,050 crore a year ago, an increase of Rs 4,61,028 crore, or 148%, reflecting a decisive shift in the composition of funding sources.According to RBI data, incremental non-food bank credit climbed to Rs 5,05,152 crore up to June 30, 2026-27, from Rs 49,813 crore in the corresponding period of the previous year, raising its share in total resource flows to 65% from 16%. This increase came even as domestic non-bank sources remained largely flat at Rs 2,67,926 crore, concealing a 43% contraction in domestic capital market instruments.Corporate bond issuances fell sharply to Rs 1,369 crore from Rs 76,517 crore, while equity issuances declined to Rs 14,657 crore from Rs 51,066 crore, indicating a steep fall in primary market fundraising and a shift by corporates towards bank funding. The flow of resources measures incremental financing to commercial sector over a period, capturing fresh disbursements net of repayments and changes across funding channels.
