High costs pull India Inc's foreign borrowing down 51%

MUMBAI: Foreign currency borrowings by Indian corporates fell sharply in March this year as high interest rates, a pronounced rupee weakness and increasing hedging costs prevented local companies from borrowing more overseas.

Indian companies borrowed only $5.43 billion in March this year, down 51% from $11.04 billion borrowed in March 2025, central bank data published Thursday showed.

Higher borrowing costs were also reflected in the fiscal year-end data, with external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs) down 30% to $42.87 billion in FY26, versus $60.93 billion in FY25.


"Typically, March sees a spike in borrowings as companies look to use up their limits for the year but last fiscal was different because of the rupee volatilities, higher global rates and more importantly higher hedging costs which meant that companies allowed their limits to expire rather than borrow at the higher cost," said a senior banking executive from a US based bank.

Outward remittances: NBFCs don't need prior RBI nod for dealer tie-ups

The rupee ended fiscal 2026 as the worst performer in Asia against the US losing close to 10% of its value in a year marked by record exits from Indian equities by overseas investors amid a global scramble for dollar-based assets. Opening the financial year at Rs 85.59 per dollar, the rupee ended at Rs 94.83. It has since weakened to an all-time Rs 95.96 per dollar.

Global financial market volatilities, particularly after the start of the Iran war, meant that corporate India could not afford to borrow abroad, especially in March.

RBI cancels registrations of 150 NBFCs; around 67 firms from Delhi, 75 from West Bengal

"A well-rated corporate could get a short-term loan at 6.5% to 7% domestically whereas the overseas rates were much higher than that. Naturally, companies chose to borrow from local banks. When hedging costs and forward rates are up, overseas loans are bound to fall. How and when it will pick up will depend on the geopolitical situation," said another senior banking executive from a UK based lender.

Two Adani Group owned companies, Rajasthan Part I Transmission ($750 million) and Adani Transmission Step-One ($500 million) along with NBFCs IIFL Finance ($700 million), Sammaan Capital ($400 million) and Bajaj Finance ($400 million) were the top borrowers during March 2026, central bank data showed.