mumbai, Dec. 27 -- After years of aggressive hoarding, Indian corporations are starting to tap cash reserves to fund dividend payouts and acquisitions, but not capital expenditure. A Mint analysis of data from the Centre for Monitoring Indian Economy showed the pace of cash accumulation hit an eight-year low by September 2025. It showed that cash and bank balances rose just 1% year-on-year to about Rs.5.4 lakh crore by September. This is a far cry from the pandemic era, when uncertainty pushed median cash balances up by nearly 15% annually between September 2020 and September 2024. Companies now sit on a cash pile equivalent to nearly 5% of total assets, up from 3.5% in September 2017 and 4% in September 2020, the analysis showed. However, these levels are still below those of their global peers. According to an August 2025 Morgan Stanley report, Indian corporate cash holdings trailed both the US and global medians, which stood at 9% and 11% of total assets, respectively, in 2024. "India Inc's cash balances may look high in absolute terms, but they are far lower than cash buffers typically held by American and European companies," said Ajitabh Bharti, executive director and co-founder of CapitalXB, a non-bank lender. Bharti said the moderation in cash build-up this year was largely due to companies setting aside funds for inorganic expansion and hefty dividend payouts in the coming year. Dividend payouts by firms hit a decade-high Rs.3.5 lakh crore in FY25, rising 14% year-on-year, a separate analysis of Capitaline data showed. While FY24 saw a brief contraction, the broader trend remains strong. In the three years prior, dividends grew at roughly 25%. While Bharti expects dividend payouts in FY26 to maintain FY25's growth trajectory, he sees corporate cash being deployed largely for strategic buyouts and mergers, rather than creating new capacity. According to PwC data, 713 mergers and acquisitions were completed in the first half of 2025, up 23% from the same period a year earlier. Interestingly, the appetite for acquisitions is growing even as corporations keep their broader investment spigots tight. New project announcements fell 12% year-on-year to Rs.8.6 lakh crore in the September quarter of FY26 after doubling in the June quarter, CMIE data showed. Capex announcements are often lumpy and tied to specific projects, sectors or policy triggers. But the broader reluctance stems from India Inc's chronically low capacity utilization levels, experts noted. Over the past two decades, average capacity utilization in Indian manufacturing was around 73%. This suggests capacity utilization has consistently fallen short of levels needed to drive a broad-based expansion cycle. "Persistently low capacity utilization is a central reason why elevated corporate cash balances have not translated into a broad-based private capex cycle," said Sonam Srivastava, founder and fund manager at Wright Research PMS. Even during periods of strong growth, incremental demand had often been absorbed through efficiency gains rather than fresh investment, she added....