Mumbai, March 31 Non-banking Financial Companies (NBFCs) continued to drive activity in the commercial paper (CP) market in March, even as corporations became cautious due to elevated short-term borrowing costs, a report by India Ratings and Research (Ind-Ra) said.
The rating agency expects the divergence in borrowing patterns to continue, with NBFCs continuing to actively access the CP market to meet their funding requirements, particularly during the end of the financial year, while corporations remain selective due to higher funding costs and comfortable internal liquidity.
March typically marks the peak funding requirement period for NBFCs, and their demand has remained strong despite the rise in yields, the report noted.
Reflecting this trend, CP issuances by NBFCs surged to Rs 70,300 crore in March 2026, up from Rs 45,500 crore in February 2026. In contrast, corporate CP issuances declined sharply to Rs 26,600 crore from Rs 40,700 crore during the same period.
"The current environment suggests that NBFCs will continue tapping short-term markets to meet quarter-end obligations, while corporates are likely to maintain a cautious stance due to cost considerations and internal liquidity buffers," the ratings agency said.
Meanwhile, issuances of certificates of deposit (CDs) by banks are likely to follow a more balanced trajectory in the coming months as deposit conditions stabilize and credit demand typically weakens at the start of the new financial year.
As of March 24, 2026, total CD issuances stood at around Rs 2 lakh crore, with public sector banks accounting for Rs 1.32 lakh crore, while private sector banks issued Rs 67,800 crore, remaining largely unchanged on a month-on-month basis.
The moderation in CD issuances indicates some easing in short-term funding pressure in the banking system, and the intensity of borrowings is expected to soften further with the fiscal rollover and anticipated improvement in liquidity conditions, the report added.