While banks’ share in incremental source of financing has declined from 65% in FY14 to 45% in FY15, non-bank sources of financing have picked up in the recent quarters. There has been a sharp turnaround in net portfolio flows, especially in corporate debt, as there was a net inflow of $17 billion in FY15 compared to outflows of $4 billion in FY14. Equity financing — FDI and primary market issuances — has picked up from $34 billion in FY14 to $46 billion in FY15. As a result, corporate bond spreads narrowed and equity markets rallied, leading to lower cost of capital for companies.
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