Indian companies raise Rs 29,212 crore via NCDs in 2016-17
Indian companies raise Rs 29,212 crore via NCDs in 2016-17

Indian companies have garnered over Rs. 29,212 crore by issuing non-convertible debentures (NCDs) to retail investors so far in the current financial year to meet their corporate needs.

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. 29,212 crore through retail issuance of NCDs during the current financial year (till January 20).

In terms of number, funds were raised through 14 issues this fiscal so far against 20 in the whole of 2015-16.

Alok Agarwala, Senior V-P and Head (investment analytics), Bajaj Capital, said, "Fund raising from capital markets is a function of cost and availability of capital. High volatility, weak sentiment 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."

He added, "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."

This fiscal, Kosammattam Finance raised funds thrice via NCDs, while Dewan Housing Finance Corporation and Muthoot Finance have raised funds twice through this instrument.

Individually, Dewan Housing Finance raised Rs. 14,000 crore through this route in the ongoing financial year. Indiabulls Housing Finance raised Rs. 7,000 crore against a target of Rs. 3,500 crore and Reliance Home Finance garnered Rs. 3,054 against a base size of Rs. 1,000 crore.

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