Pattern of Corporate Financing in India

Overview of Pattern of Corporate Financing in India
The pattern of corporate financing in India has been different throughout its economic history. The outline of corporate financing in India has been determined by the economic rules and regulations that operate at different points of time.

Pattern of Corporate Financing in India from 1960 to 1990
During the 30-year period in Indian economy ranging from 1960 to 1990 the stress of Indian economy was on public finance. There were a lot of rules and regulations regarding various economic issues like rates of interest and many more.

During the middle part of the decade of 80s there was some change in the Indian economic scenario.The performance of the capital markets in India improved.

Certain measures that helped in this positive change include the following:
Partial Relaxation of the Indian Industrial Sphere
Advent of a Debenture Market
Presentation of an Economic Policy for a Long Term

Pattern of Corporate Financing in India from 1990 onwards
After 1992 a lot of reforms have been made in the capital markets of India. The performance of the stock markets of India was remarkable in the 1990s. This was keeping with the healthy state of the Indian economy in and around that time.

All this altered the trend of corporate financing in India. The dependency on banks for loans or other financial assistance reduced to a significant extent. The equity capital that was gained from the capital markets came up as a suitable alternative for them.

The Gross Domestic Product of India rose steadily in this period. The Gross Domestic Product went up by about 4.3% in 1992-93. The Gross Domestic Product of India again increased by almost 2% in the year 1995-96. The growth rate of the Gross Domestic Product of India has been impressive in the recent years.

Role of Banking Sector in Pattern of Corporate Financing in India
The banking sector of India has played an important role in the context of the development of Indian economy. The banks of India have been doing well with the distribution of funds and monetary resources for the purpose of the development of India’s economy.

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Last Updated on : 27th June 2013

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