Lured by higher liquidity and lower rates, and with the RBI relaxing the norms, Indian corporates have increasingly turned to overseas borrowings.

Reliance Industries Ltd (RIL) and its arms been at the forefront in raising external commercial borrowings (ECBs) over the past few years.

According to RBI data, the oils-to-telecom group collectively raised about $23.48 billion through ECBs between FY17 and September FY21.

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Based on the RBI’s monthly USD-INR exchange rate at the end of the respective financial years, the total borrowing in rupee terms comes to about ₹1.65-lakh crore. Of the total borrowing by the group, the share of holding company RIL alone stood at $17.27 billion, followed by Reliance Jio Infocomm ($5.25 billion), Reliance Sibur ($669 million) and Reliance Utilities & Power ($300 million).

Multiple tranches

It may be noted that the RBI's monthly data on ECBs and foreign currency convertible bonds (FCCBs) include both fresh borrowings and refinancing of existing loans.

Also, while its data refer to the amount of overseas loans approved by it, a company may choose to draw the entire loan amount at one go or withdraw it in multiple tranches spread over the years.

Per RIL’s FY20 annual report, its standalone borrowings (in foreign currencies) surged 69 per cent to ₹1.55-lakh crore as of March 2020, from ₹91,328 crore during the same period in the previous year.

State-owned Power Finance Corporation (PFC) was the second highest borrower of overseas loans, raising about $6.15 billion between FY17 and September 2020, while global steel giant ArcelorMittal came in next at $5.04 billion.

ECBs have become one of the preferred routes of fund-raising for well-rated Indian corporates, especially the non-banking financial companies (NBFCs), over the past few years. India Inc's fund-raising under this route jumped to a record high of $52 billion in FY20 from about $17.4 billion in FY17.

Current scenario

However, overseas borrowing is yet to take off in the current fiscal due to anaemic credit demand and the absence of major expansion plans by top corporates due to Covid-led business uncertainty. As of October 2020, Indian corporates had collectively raised $14.52 billion, about half the $28.58 billion raised in the previous-year period.

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