50 subject one dollar note sheets are run through an intaglio printing press before the face is printed in Washington, D.C. (Photographer: Andrew Harrer/Bloomberg) 

ECB Surge: External Commercial Borrowing Approvals Surged In March

The approvals sought from the Reserve Bank of India to raise foreign debt or external commercial borrowings surged in March, showed data released by the central bank. Apart from one-off approvals linked to stressed asset investments, large corporates took advantage of a turn in the global interest rate scenario and a fall in hedging costs in the domestic market.

The data for external commercial borrowing approvals shows that firms took approvals for $12.18 billion in foreign currency borrowings. Of this, $7.69 billion was under the approval route, while the remaining came under the automatic route.

Also read: Indian Firms Step Up Global Borrowings As Conditions Turn Favourable

The largest approval was sought by ArcelorMittal India Pvt. Ltd., which is looking to bring in $5.04 billion in debt, showed the data. The funds are likely to be for the global steel giant’s acquisition of insolvent Essar Steel Ltd., which is in its final stages. While lenders have approved ArcelorMittal’s resolution plan, litigation regarding payment distribution among creditors has stalled the asset transfer.

Reliance Industries Ltd. took approval to bring in $1.5 billion. It’s telecom services business, Reliance Jio Infocomm, raised another $750 million.

Other large borrowers include Jio rival Bharti Airtel Ltd. which raised about $198 million and Rural Electrification Corporation Ltd. raised $400 million.

The month also saw financial services firms diversify towards external borrowings as domestic financing conditions have been tough. HDFC Ltd., Cholamandalam Investment and Finance Company Ltd. and Piramal Capital and Housing Finance Ltd., were among those that tapped the overseas market.

Also read: RBI’s Forex Swap Auctions And The Law Of Unintended Consequences