Overseas borrowings by India Inc decline about 35 per cent yoy in April-July period

Resources raised by India Inc via external commercial borrowings (ECBs) in the first four months of FY23 at $5.197 billion were about 35 per cent less compared with $8.0258 billion in the year ago period.

This decline in resources mopped up by Indian companies via ECBs comes the backdrop of rise in interest rates in advanced economies and depreciation of the rupee.

‘While external borrowings in the form of ECBs played an important role in supplementing the domestic financing needs of companies in the past, with the global backdrop of higher rates and depreciating currency, their relative attractiveness has diminished,” said Aditi Gupta, Economist, Bank of Baroda.

As per latest Reserve Bank of India monthly data, India Inc raised $1.5125 billion in July 2022, down about 56 per cent vis-a-vis $3.4341 bilion mopped up in July 2021.

Five entities raise $100 m

During the reporting month, five entities raised $100 million and above – Export-Import Bank of India ($300 million), REC ($200 million), Vedanta ($164 million), Tata Capital Financial Services ($120 million)and Cholamandalam Investment And Finance Company ($100 million).

According to RBI’s bulletin, ECBs recorded net repayments of $3.3 billion during the first quarter of FY23 as against net disbursements of $0.2 billion in the first quarter last year.

“Credit demand in the economy has gathered steam in recent months amidst a pickup in economic activity. In July 2022, bank credit rose by an impressive 15.1 per cent on a year-on-year basis. With capacity utilisation rates picking up (75.3 per cent in Q4FY22), the demand for credit is likely to see a further pickup,” Gupta said.

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