Mumbai: Corporate lending at the top tier of Indian private banking surged in the June quarter to beat retail credit growth nearly 2.5 to 1, with higher bond yields pushing companies back to mainstream lenders for working capital and helping lift aggregate business, senior bank officials said.Corporate loan books at large private banks rose 26% year-on-year, on average, far outpacing retail loan growth of around 10%.The lending revival to corporates helped lift overall bank credit growth to 18.6% in the fortnight ended June 30, the fastest pace in more than two years, Reserve bank of India (RBI) data showed.India's largest private sector lender, HDFC Bank, reported a corporate loan growth of 18.6%, while retail loans for the bank climbed 7.2%. Axis Bank's corporate loans surged 38%, while retail loans advanced at just 8%. Yes Bank's corporate advances climbed 41%, while retail loans advanced just 7%."A pick-up in corporate loans is largely due to working capital demand. We have also seen moderation in the bond and equity markets, which has provided an opportunity," ICICI Bank's executive director, Sandeep Batra, said in a post-earnings press interaction.Yields on 10-year government bonds, used as a benchmark to price corporate bonds, rose to a high of 7.13%, and averaged at 6.99% in the June quarter, increasing borrowing costs for corporates via the bond market.Higher YieldsIn Q4FY26, the 10-year yield averaged at 6.68%, while in Q1FY26 the average benchmark yield was 6.30%.By contrast, State Bank of India's one-year marginal cost of funds-based lending rate (MCLR)-tied to its internal benchmarks-is 8.70%."The credit market became a major source of funding for the economy because yields in the bond market inched up in June; so companies turned to bank loans," said IDFC First Bank chief economist Gaura Sen Gupta."There is some loss of momentum because of the (Iran) war, no doubt. But demand has largely been shielded by the government and oil marketing companies," Sen Gupta said.Sectors that banks are seeing a demand from include commercial real estate, infrastructure and metal for working capital loans, data centres, roads infrastructure and the food sector."We have seen demand from commercial real estate, infrastructure and metal for working capital loans to take care of shorter cycle requirements," said Puneet Sharma, chief financial officer, Axis Bank.The bank said it has also seen traction on project finance and term loans.