Mumbai, April 1 -- Non-banking Financial Companies (NBFCs) continued to drive activity in the commercial paper (CP) market in March, even as corporates turned cautious amid elevated short-term borrowing costs, a report by India Ratings and Research (Ind-Ra) said. The rating agency expects the divergence in borrowing patterns to persist, with NBFCs continuing to access the CP market actively to meet funding requirements, particularly during the financial year-end period, while corporates remain selective due to higher funding costs and comfortable internal liquidity. March typically marks the peak funding requirement period for NBFCs, and their demand has remained strong despite the rise in yields, the report noted. Reflecting this trend, commercial paper issuances by NBFCs surged to Rs.70,300 crore in March 2026, up from Rs.45,500 crore in February 2026. In contrast, corporate CP issuances declined sharply to Rs.26,600 crore from Rs.40,700 crore during the same period. "The current environment suggests that NBFCs will continue tapping short-term markets to meet quarter-end obligations, while corporates are likely to maintain a cautious stance due to cost considerations and internal liquidity buffers," the ratings agency said. Meanwhile, issuances of certificates of deposit (CDs) by banks are likely to follow a more balanced trajectory in the coming months as deposit conditions stabilise and credit demand typically weakens at the start of the new financial year. As of March 24, 2026, total CD issuances stood at around Rs.2 lakh crore, with public sector banks accounting for Rs.1.32 lakh crore, while private sector banks issued Rs.67,800 crore, remaining largely unchanged on a month-on-month basis....