Forex bor­row­ings in In­dia set to be lowest in 5 years

The Pak Banker - - 6BUSINESS -

MUM­BAI: For­eign cur­rency bor­row­ings by In­dian com­pa­nies are headed for the lowest in five years in the year to 31 March as global mar­ket volatil­ity de­ters overseas fund rais­ing. Ex­ter­nal com­mer­cial bor­row­ings (ECBs) to­talled $22.85 bil­lion in the first 11 months of fis­cal 2016, data from the Re­serve Bank of In­dia (RBI) show. The bor­row­ings could be the lowest since fis­cal 2010, when com­pa­nies raised $20.37 bil­lion through ECBs. Volatile global mar­kets and a de­pressed in­vest­ment cy­cle at home have pre­vented In­dian com­pa­nies from tap­ping off­shore funds. Debt-laden firms pre­ferred to bor­row to re­tire old and costlier loans rather than in­vest.

For in­stance, in Fe­bru­ary, out of $1.35 bil­lion raised, more than $350 mil­lion was to­wards re­fi­nanc­ing of old forex loans and a mere $94 mil­lion was to­wards new projects. The Fe­bru­ary bor­row­ing was down 40% from a year ago. Of the to­tal bor­row­ing in the month, $1.02 bil­lion was raised through the au­to­matic route and $330 mil­lion came through the ap­proval route. Only one firm, Bharat Petroleum Corp. Ltd, raised the en­tire $330 mil­lion via the ap­proval route and the pro­ceeds were meant for re­fi­nanc­ing an ear­lier loan. Un­der the au­to­matic route, NTPC Ltd raised $500 mil­lion for power projects, Stelis Bio­pharma $47 mil­lion for a new project, JK Tyre and In­dus­tries Ltd and Sin­tex In­dus­tries Ltd $35 mil­lion each for mod­ern­iza­tion and Rain In­dus­tries Ltd $30 mil­lion for overseas ac­qui­si­tion. The build-up to­wards an in­ter­est rate hike by the US Fed­eral Re­serve that was an­nounced in De­cem­ber 2014, and data in­di­cat­ing a wors­en­ing Chi­nese eco­nomic slow­down led in­vestors to turn wary on emerg­ing mar­ket debt last year.

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