New Delhi, Dec. 29 -- Corporate lending by Indian banks, which has lagged overall credit growth in recent years, could see a revival in the coming quarters as borrowing cost differentials narrow and regulatory support improves, according to a latest report by Ambit Capital.

The interest rate gap between bond yields and benchmark rates (EBLR/MCLR) is a key factor driving this shift, it said.

The report noted that banks' loan growth to corporates has remained muted since the pandemic, largely due to aggressive deleveraging by companies and a shift towards alternative funding sources such as bonds, commercial paper and overseas borrowings.

Corporate debt-to-equity ratios have declined sharply to around 0.7-0.8x in the Financial Year 2024 ...