NBFCs Raised Record Rs. 3.65 Lakh Cr Through ECBs In 2024

ENA Sectors 2025-01-09 14:02:25 New Delhi, Jan 9 (KNN) Non-banking financial companies (NBFCs) in India have reached a five-year high in external commercial borrowings (ECB) during 2024, raising Rs 3.64 lakh crore, according to the PRIME database. This surge follows the Reserve Bank of India's November 2023 directive that imposed stricter lending requirements on banks financing NBFCs. The global monetary environment has created favorable conditions for Indian NBFCs to access international funding. Even companies rated below 'AA' have successfully secured offshore funding, benefiting from a worldwide trend of declining interest rates. Bank of Baroda's chief economist Madan Sabnavis notes that while NBFCs can currently access lower borrowing rates in international markets compared to domestic options, they must carefully weigh the foreign exchange risks involved. The regulatory landscape has played a significant role in this shift, with the RBI's November decision to increase risk weights on bank funding to NBFCs prompting these institutions to diversify their funding sources. This has led to a notable slowdown in credit growth to NBFCs, dropping from 21.6 percent to 15.2 percent year-over-year, according to RBI data. In response, NBFCs have increasingly turned to both domestic bond markets and international funding options. The current financial environment presents both opportunities and challenges for NBFCs pursuing ECB funding. While the rupee has experienced a 2.93 percent depreciation since the beginning of 2024 due to a strengthening dollar index, many NBFCs are still finding value in ECB arrangements. Jinay Gala, director at India Ratings and Research, explains that companies can secure ECB funding at competitive rates of around 8.6-8.7 percent on a fully hedged basis, comparable to domestic market rates of approximately 8.5 percent for highly-rated entities. Several major NBFCs have already capitalised on these opportunities in 2024. Shriram Finance led the way with a diverse USD 1.277 billion ECB transaction across multiple currencies, while Muthoot Finance secured USD 400 million through its global medium term note programme. Other significant players, including Cholamandalam Investment and Finance Company and HUDCO, are also exploring ECB funding options, indicating a continued trend toward international borrowing in the sector. (KNN Bureau) 40572 https://knnindia.co.in/news/newsdetails/sectors/nbfcs-raised-record-rs-365-lakh-cr-through-ecbs-in-2024 2025-01-09 14:02:25 knnindia.co.in NBFCs Raised Record Rs. 3.65 Lakh Cr Through ECBs In 2024