India Inc’s fund-raising through external commercial borrowings (ECB) in the first 10 months of 2014 has totalled $31.43 billion, a rise of 13% year-on-year.
Data from the Reserve Bank of India showed that companies raised a total of $4.99 billion through forex loans in October, which is a massive increase of 158% from a year ago.
Loans borrowed through the automatic route were $2.7 billion while that through the approval route was $2.28 billion. Foreign investors have shown a keen interest in Indian debt, both through loans and bonds owing to the high interest rate differential between the country and other economies.
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Apart from the interest-rate advantage, an expected pick up in the economy and a stable currency have all prompted investors to buy around $18 billion of Indian paper offered in the international markets through bond issues so far in 2014.
In the loan market too, given a strong demand and the rock bottom interest rates in the international markets, most Indian companies have opted to raise funds through forex loans.
RBI has also eased norms for ECBs progressively from simplifying procedures in August to allow companies to park the funds raised through ECBs in bank deposits for up to six months until they finally use these funds.
In October, the notable borrowings were $750 million by Reliance Jio Infocomm taken for rupee expenditure, $750 million by Tata Motors borrowed for refinancing and $200 million by Larsen & Toubro to refiance repayment of foreign currency convertible bonds.