Indian corporate houses face a sharp, abrupt increase in funding costs

The sharp rise in interest rates in the financial markets has made companies turn to commercial banks for their borrowing requirements

After two years of a record low interest-rate regime, Indian corporate houses are experiencing a sharp and abrupt increase in funding costs.

With the Reserve Bank of India last month making an unequivocal turn towards policy tightening amid high inflation, firms looking to tap the capital markets for funds are ending up shelling out more.

The yield on the benchmark triple-A-rated corporate bonds maturing in three years has climbed 98 basis points (bps) since the policy rate hike in May. It was last at 7.47 per cent, Bloomberg data showed. The yields on triple-A rated paper maturing in 5 and 10 years