Mumbai: Companies have increased their funding reliance on corporate bonds and commercial papers replacing working capital limits from banks which is impacting banks corporate loan growth. Also, with interest rates falling, companies are prepaying loans.State Bank of India (SBI) the country’s largest lender that reported its April-June 2025 quarter earnings on Friday saw its corporate credit loan book grow 5.7 per cent from a year earlier.However, the bank is hopeful of a double-digit corporate credit growth in the next quarter despite US tariff-related turmoil, its chairman CS Setty told reporters at the Bank’s earnings conference. “There is some shift towards market instruments. We have seen that utilization of working capital limits, which was 62 percent in Q1FY25, has come down to 58 percent now. We have also seen that some large corporates are accessing the CP market, basically to replace the working capital limits,” Setty explained.He said that around Rs 12,000 crore of loans were prepaid by companies while Rs 16000 crore to Rs 18000 crore of loans moved to the bondmarket impacting the bank’s corporate loan growth. SBI has almost Rs 7 lakh crore corporate loans that are in the pipeline in terms of proposals under discussion and also sanctioned but yet to be disbursed loans.SBI reported a 12 per cent rise in net profit at Rs 19160 crore for Q1FY26. Responding to a question on the impact of US tariffs on the bank’s books, Setty said that direct business impact from US tariffs would be limited, however uncertainty resulting from the tariffs would delay investment decisions and slow businesses down.President Donald Trump this week imposed an additional 25 per cent tariff on Indian goods as punishment for Delhi’s purchases of Russian oil. That raised the total duty on Indian exports to 50 per cent – among the highest of any US trading partner.
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