External commercial borrowings decline in Jan

MUMBAI: Overseas corporate borrowings by the India Inc declined in January as compared to the preceding two months despite softening interest rates globally as the Central government has put curb on overseas debt.

The total overseas borrowings raised by 52 companies through External commercial borrowings (ECBs) and foreign currency convertible bonds declined to 1.18 billion dollars in January from 2.26 billion dollars in December and 2.21 billion dollars in November, according to latest figures released by the Reserve Bank.

The Centre has been tightening the norms for ECBs as huge inflows of capital are appreciating rupee and in turn hurting exports. It has announced that not more than USD 20 million raised through ECBs can be brought back to India for rupee expenditure purposes. To remit even USD 20 million, prior approval of the RBI is needed.

The ECB data for January showed that most of the overseas debts were used for importing capital goods with NTPC borrowing USD 380 million, followed by Delhi International Airport at USD 200 million and Ashok Leyland at USD 200 million. Jet Airways borrowed USD 231 million, however, for financial lease.

Similarly, December also saw the import of capital goods as the prime reason of these borrowings. While Reliance Telecom Infrastructure borrowed the highest amount USD 500 million for the import of capital goods and telecommunications, Shipping Corporation of India raised USD 339 million for capital goods.

In November, National Aviation Company of India was the highest borrower at USD 601 million for financial lease, followed by Firstsource Solutions which mopped up USD 275 million for overseas acquisitions.