Business Daily from THE HINDU group of publications
Sunday, Jun 29, 2008
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Business Daily from THE HINDU group of publications Sunday, Jun 29, 2008 ePaper | Mobile/PDA Version | Audio |
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Financial Policy Corporate - Overseas Borrowings ECB inflow slows down in April-May 
Our Bureau
Mumbai, June 28 Overseas borrowing by Indian corporates has slowed down, as is evident from the figures on external commercial borrowings for the period April-May released by the Reserve Bank of India. According to the RBI data, in April, 25 corporates had raised about $1.16 billion through ECBs and Foreign Currency Convertible Bonds. In May, as many as 30 companies had raised about $1.27 billion overseas. As against this, in March about 55 companies borrowed nearly $4.47 billion through this route. RBI curbsAccording to a senior official from a large public sector bank, the restriction by the RBI on ECBs, imposed last year, is one of the reasons for the slowdown of ECBs. In August 2007, the RBI said that a company can bring only $20 million of the overseas borrowing into India, though the total that a single company could raise was maintained at $500 million. “The question is whether corporates are able to raise resources at the rates obtaining now and within restrictions imposed by the RBI,” said an official from a PSU bank. Mr Vishwavir Ahuja, Managing Director and CEO (India), Bank of America, said that Indian corporates’ appetite for raising funds through the ECBs route may lessen this year, as the differential between overseas and domestic interest rates had reduced considerably. The currency conversion factor and high cost of transaction are also reasons for overseas borrowing becoming less attractive, he said. BorrowingsIn April, companies that borrowed overseas included Aban Offshore Ltd at $200 million, Reliance Communications $250 million and Reliance Pharmaceuticals $180 million. In May, some companies that borrowed overseas were Reliance Communications $200 million, Reliance Telecom $150 million and Jet Airways $287 million. Borrowing overseas is not attractive enough for cos Corporates can borrow up to $50 m overseas Borrowing abroad seen attractive despite rising dollar More Stories on : Financial Policy | Overseas Borrowings
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