Mumbai: India’s bad-debt problems and bond-market volatility are making it harder for companies to borrow from institutions, prompting the firms to seek funds from savers instead and pushing up their sales of rupee notes to individuals to a record.

Debt offerings to the public by companies surged to Rs15,443 crore ($2.29 billion) in the first two months of the financial year started 1 April, the most on record for the period and up eight-fold from a year earlier, Securities & Exchange Board of India (Sebi) data showed.

For individual investors, the corporate bonds are a way to earn higher yields than bank deposits. Dewan Housing Finance Corp., whose public issuance of notes was India’s largest last month, offered three-year securities at 8.9%, for example, compared with a 6.7% rate for similar-maturity deposits at State Bank of India (SBI).

For companies, selling bonds to individuals means having to shell out a little more than issuance to institutions. But they have little choice as banks hold back from lending amid a crackdown on bad debt, professional investors avoid notes due to the market’s volatility, and the rupee’s weakening makes it difficult for firms to borrow money overseas, according to Shashi Kant Rathi, executive vice president and head of treasury and markets at Axis Bank Ltd.

The company notes to individuals are selling out quickly. Dewan Housing’s securities were fully subscribed within two days from opening, while JM Financial Credit Solutions Ltd’s debut issuance closed within a day.

Other companies are lining up too, with Indiabulls Housing Finance Ltd seeking ratings for Rs12,000 and Shriram Transport Finance Co. for a Rs5,000 public offering.