The overseas fundraising pipeline of Indian corporates through loans and bonds appears robust in the upcoming financial year (FY27), aided by a pick-up in capacity utilisation that could eventually spur private capex.
The need for domestic lenders to diversify their liabilities could also push up external commercial borrowing (ECB) volumes.
They could go up by 25–30 per cent in FY27 to up to $65 billion from $50 billion in FY26, said Neeraj Kumar, managing director (MD) and head of corporate banking, South Asia at Citi, during an interaction with Business Standard.
At the same time, due to the turbulent geo-political developments, there could be occasions when the overseas market may be unviable.
“Given what’s happening in the world, we will always find some windows when the markets are not available or it is not advisable to access them. However, there will be windows of execution that the market will present through the year. Clients will take advantage of those opportunities,” Kumar said.
According to Kumar, the corporate funding pipeline looks strong, driven by multiple factors, including demand from lending institutions.
With credit growth strong and domestic liquidity conditions witnessing their own ups and downs, lenders are increasingly looking to diversify their liability sources, he said.
The dollar bond market was undersupplied in FY26 due to a variety of reasons, so there is pent-up supply. In FY27, dollar bond issuances may touch $15-17 billion, according to Kumar. “The dollar bond issuance will supplement the ECB loan pipeline,” Kumar added.
The easing of ECB norms by the Reserve Bank of India (RBI) is also expected to significantly boost overseas fundraising by Indian companies.
Under the amended rules, companies can raise up to $1 billion or 300 per cent of their net worth, substantially enhancing headroom for large corporates to tap foreign capital markets.
The removal of pricing caps for longer-tenor borrowings allows firms to negotiate rates based on market conditions rather than regulatory ceilings, improving execution flexibility.
According to Kumar, domestic credit growth has started picking up, initially with retail credit growth, and now that is translating into corporate credit demand coming back.
The first step in corporate credit demand is working capital utilisations going up, which if sustained, will lead to capacity utilisations rising.
Once utilisation reaches a certain level, it would lead to the next round of capex.
“We are seeing capex happening in parts, but there is no broad-based rush to undertake capex,” Kumar said, adding that investments are picking up in sectors such as renewables, energy transmission infrastructure, data centres, the electronics manufacturing ecosystem, and aviation. Capex is likely to rise over the next 5-10 years.
“Clients remain very optimistic about the India macro. But once you overlay that with what’s happening in the rest of the world, the whole supply chain is getting realigned. Looking at all this, I see that the corporate sector wants to invest. But it is also about having very disciplined capital allocation, because utilisation rates are not very high to the extent that they would really call for a capex cycle,” Kumar said.
Commenting on how Citi sees competition on acquisition financing now that domestic banks have been allowed to fund such transactions, Kumar said, “…our strength lies more in cross-border transactions to start with. Our strength also lies in structuring more complex transactions. So, I think some of those things will still remain at play. But at the margin, yes — in transactions which, in the past, were not available to domestic banks to finance, you will see more competition coming in.”
He also highlighted that the cost of such transactions will now decrease because more liquidity will be available to borrowers. This is because of a large pool of bank capital coming into certain financing structures.
However, domestic banks perhaps are not as equipped in areas such as leveraged finance or structured finance, which foreign banks are much more equipped to handle, he said.
Kumar also emphasised that following Citi exiting retail business in India, it has doubled down on institutional business as all resources are now allocated to it.
“The strategy pillars still remain the same. Our presence in 94 countries brings a huge network, which is quite unmatched. Our network remains a key pillar of our strength and engagement with clients”, Kumar said.
“Think about a client based in India who wants to access markets outside. Citi can offer the same seamless experience whether the client wants to deal in Africa, Europe or Latin America. It is a very seamless way of accessing markets with one coverage team acting as your window to the rest of the world. That, I would say, has been a big advantage for banks like us versus the competition,” he added.
