New Delhi [India], October 31 (ANI): Bank lending to India's commercial sector increased sharply during April-August of the current financial year (FY27), even as corporate bond issuances by non-financial companies declined amid rising bond yields, according to the Finance Ministry's October Monthly Economic Review.

The report showed that total financial resources flowing to the commercial sector from banks and non-bank sources increased by 55.4 per cent to Rs 17.5 lakh crore during April-August FY27, compared with Rs 11.2 lakh crore in the corresponding period last year.

'The primary source of this growth has been non-food bank credit, amounting to Rs 9.8 lakh crore, up from Rs 3.8 lakh crore a year earlier; corporate bond issuances by non-financial entities, by contrast, fell to Rs 0.3 lakh crore from Rs 1.5 lakh crore over the same period as bond yields moved up,' the report stated.

This indicates that bank lending was the main contributor to the increase in financial resources available to businesses, while fundraising through corporate bonds weakened during the five-month period.

According to the review, overall bank credit growth also remained strong.

'As of 30th September, bank credit has registered an increase of 21.6 per cent (up from 10.4 cent a year ago) with non-food credit registering a growth of 21.4 per cent,' the report said.

The increase was supported by strong lending activity across major sectors of the economy.

The review noted that credit to industry grew by 18.2 per cent year-on-year in August 2026, compared with 7.0 per cent in the corresponding period last year.

Lending to medium industries increased by 31.8 per cent, followed by micro and small industries at 23.0 per cent and large industries at 14.9 per cent.

The services sector also recorded strong credit growth of 24.3 per cent year-on-year, with lending to shipping and computer software services increasing by 25.6 per cent and 41.8 per cent, respectively.

The Finance Ministry expects the momentum in bank lending to continue during the remainder of the financial year.

'This momentum in bank credit is expected to continue through the remainder of FY27,' the review stated.

Citing the Reserve Bank of India's (RBI) latest bank lending survey for the second quarter of FY27, the report said banks reported stronger loan demand across sectors, with the loan demand net response rising to 46.7 from 32.1 in the preceding quarter.

Banks also expected demand to remain strong in the third quarter, with the expectations net response standing at 43.3.

The findings indicate continued demand for bank financing from businesses despite higher borrowing costs and uncertainty in financial markets. (ANI)