The Hindu Business Line : Chola DBS gets RBI nod for $50 m ECB

Chennai, Nov. 1 Cholamandalam DBS has received the approval of the Reserve Bank of India to raise $50 million (Rs 225 crore) via external commercial borrowings. The company is the first Non Banking Finance Company to get the regulator’s nod for an ECB after about half a decade of ban on NBFCs raising funds from abroad.

This will help Cholamandalam DBS, a joint venture of the Murugappa Group and the Singapore-based DBS Bank, to avoid a liquidity crunch.

The company has lately seen some stress in repayments of its consumer finance business and has said that it would “scale down” the business and close about 50 branches.

Cholamandalam DBS’ Chairman, Mr M.A. Alagappan, told Business Line on Saturday that the promoters had resolved to bring in fresh equity of Rs 500 crore. He said that he had also arranged lines of credit from banks.

Getting bank credit has been made easier by Saturday’s measure of the Reserve Bank of India, which has allowed banks a relaxation in their SLR requirements, provided the funds generated are used to give loans to NBFCs and mutual funds.

Meeting of minds

Asked for comments on rumours that the two partners would part ways, Mr Alagappan replied in the negative. He said that there was now a meeting of minds as to the way the business would be conducted — paring consumer and personal finance and focussing more on areas such as vehicle finance, home equity and promoter funding.

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