India’s money-market turnover jumped to a record as state-owned lenders stepped up borrowing to fund booming credit demand.The value of trades in the so-called tri-party repurchase segment, which accounts for about 70% of the nation’s money markets, rose to an all-time high of 5.5 trillion rupees ($57.8 billion) on May 13 and has stayed elevated since, according to Bloomberg-compiled data.Also read: Tokenisation could be the next big upgrade to India's market plumbingIndia’s economic growth has held up well despite the energy crisis caused by the US-Iran war, preserving credit demand. State Bank of India is seeing strong loan uptake from sectors including power, renewables and data centers, Chairman CS Setty said Wednesday.However, the funding rush had pushed up overnight borrowing costs and short-term bond yields in recent weeks, underscoring banks’ ongoing struggle to attract deposits as household savings flow into other investment products.BloombergBorrowing costs harden in May as banks fund credit growth The money market “provides the cheapest source of funds available” during a period when the cost of funds for banks is witnessing upward pressure, said Kanika Pasricha, chief economist at Union Bank of India.Bank lending expanded at 16.2% in the year through May 15, the fastest clip in two years, with credit demand exceeding deposit growth for the eighth straight month, according to the latest central bank data. The credit-deposit gap widened to about 400 basis points, the most in about two years, the data show.Also read: Rupee@100? India’s Economists Weigh InAdding to the money-market turnover, private banks traditionally net borrowers unusually pivoted to being lenders in May, according to an analysis by the Clearing Corp. of India.The shift appears to be a result of “banks temporarily deploying proceeds from the sale of rate-sensitive investments amid concerns of a currency-defence-driven rate hike,” said Tanay Dalal, an economist at private sector lender Axis Bank.