Indian banks, led by public sector banks (PSBs), are set to issue a record Rs 1.2-1.3 lakh crore in bonds in FY25, surpassing the previous peak of Rs 1.1 lakh crore in FY23, according to ICRA. PSBs will dominate the bond issuances, accounting for 82-85% of the total, with infrastructure bonds playing a key role. Banks have turned to bond issuances due to tight liquidity and credit growth exceeding deposit growth. Infrastructure bonds, benefiting from government spending and demand from insurance companies and provident funds, will remain central to funding the Rs 13-14 lakh crore infrastructure loan sector.
