India Inc is increasingly tapping the domestic bond market to raise funds, taking advantage of surplus liquidity in the banking system following RBI’s measures to attract foreign capital.

This also comes amid expectations that interest rates could rise as the RBI’s rate-setting panel may act to counter the potential imported inflationary impact of rising crude oil prices.

Corporates such as Reliance Industries (which plans to mobilise up to ₹12,500 crore via 5-year bonds), Larsen & Toubro (has raised ₹500 crore through tokenised bonds with a 3-year tenure), Muthoot Fincorp (which plans to raise up to ₹700 crore via bonds of 2-6 years maturity), REC (which has raised ₹500 crore, 20-months bond), among others, are either in the process of raising funds or have recently done so.

The surplus liqudity in the banking system can be gauged from the fact that, as on September 8, excess liquidity stood at ₹10.49 lakh crore.

This situation has arisen because banks swapped the $127.23 billion of inflows raised through FCNR(B) deposits under the RBI’s concessional swap window with the central bank, thereby receiving an equivalent amount of rupee liquidity.

Ajay Manglunia, Executive Director, Capri Global Finance, said: “There is a lot of liquidity in the domestic market, which is helping keep interest rates relatively stable. Otherwise, given the rise in crude oil prices, rates would probably have moved up significantly.

“The current liquidity situation is creating a window for corporates to raise money before rates potentially rise further. There has been significant dollar-driven liquidity flowing into the domestic market.”

A banker said there is around ₹10–12 lakh crore excess liquidity in the system, much of which is finding its way into the overnight market, where rates are currently around 4-5%. So, banks are looking at higher yield opportunities and corporate bond issuances are offering them liquidity deployment window.

Manglunia noted that for a highly rated (AAA) corporate, a 7.47% coupon on five-year paper is a reasonable rate in the current environment. Six months ago, the rate would have been around 7.00–7.10%, depending on the exact timing and market conditions. Several PSUs were raising money at around 7% before the recent increase in rates.

Published on September 9, 2026