Funds raised by Indian companies through external commercial borrowings (ECB) and foreign currency convertible bonds (FCCBs) surged in December, according to the latest data released by the Reserve Bank of India (RBI).
Indian companies raised over US$4.46bn from overseas markets in December through ECBs and FCCBs. India Inc. had raised US$1.58bn in November through ECBs and FCCBs.
More than 90 companies raised ~US$2.7bn for various projects through the automatic route in December which does not require approval from the RBI.
Under the approval route, Sasan Power raised ~US$1.76bn in two tranches for its ultra mega power project (UMPP) in Madhya Pradesh, according to the RBI data.
State-run oil major Indian Oil Corp. (IOC) raised US$250mn for import of capital goods through ECBs. Sistema Shyam Teleservices raised US$230mn for refinancing of old loans.
Samalkot Power raised US$587.78mn through ECBs under the automatic route for its power projects.
The spike in foreign currency loans raised by India Inc. in the last month of 2011 was sparked by high domestic borrowing costs and partly due to RBI measures to boost dollar inflows.
In September, the RBI approved an increase in the ECB limit under the automatic route and followed that up with a hike in the all-in-cost ceiling in November.
In December, the RBI also allowed MFIs to raise money via ECBs besides also permitting the NRIs to hedge their currency risk in ECBs.