Export Development Canada has provided the first-ever masala loan of Rs 340 crore to Infrastructure Leasing & Financial Services, making it the first time to lend in rupees.
The financing has been provided for IL&FS’ general corporate purposes, and is expected to be used for roadway and infrastructure improvement projects.
Nathan Nelson, chief representative for India, EDC, said it is not only "our" first loan extended in rupees, but also the first transaction with IL&FS and demonstrates EDC’s commitment to support Indian businesses in the currency of their choice.
EDC has given loans of over $1 billion to facilitate business between Indian and Canadian companies. It has lent to Tata Communications, Reliance Industries, Tata Power, Ideal Cellular, Ultratech Cement, Indian Oil Corp, Tata Steel and Larsen and Toubro.
“As a foreign lender, EDC has developed this unique financing structure to provide masala financing, a service that we will now be looking to offer to more companies in India,” said Sandeep Bhatt, Senior Regional Manager in India, EDC.
The masala loan is the first Indian rupee ECB loan of its kind since the revised Reserve Bank of India guideline changes.
For IL&FS, which undertakes sponsorship and development of infrastructure projects, the revenue profile is predominantly in rupees,” said Ramesh Bawa, CEO and Managing Director, IL&FS.
The masala loan eliminates currency risk entirely and deploys funding directly into the various requirements without having to convert foreign funding to Indian rupees, he said.