RIL receives RBI approval to retain extra $2 billion from lenders

21 Jun 2023 , 11:55 AM

The Reserve Bank of India (RBI) has given Reliance Industries, the largest firm in the nation by market value, permission to keep $2 billion in addition to the $3 billion it raised in the previous fiscal year under the largest syndicated credit facility in years.

According to news reports, central bank clearance was required because the sum collected exceeded Mint Road’s established thresholds. According to the reports, Reliance intends to utilize the funds to build its new energy and telecom companies as well as to cover working capital needs.

This was touted as being one of the most sought-after loan offers in recent years in India. More than 30 banks participated in the loan syndication, which was finished at the end of March.

Undoubtedly, the external commercial borrowings (ECBs) rules of the central bank limit a person’s exposure to $750 million annually. Beyond this threshold, businesses must need special clearance from the RBI in order to raise money overseas.

The loan, a five-year ECB, represents an Indian corporate house’s greatest use of syndicated term loans in at least five years. The syndication included banks from the UK, the US, and India, as well as South Korea, Taiwan, and Mauritius.

According to a report in ET’s October 10, 2022 edition, the loan funds were targeted to finance Reliance Industries’ capital expenditures and Jio’s 5G development. The interest rate on the loans is 150 basis points, or 1.5 percentage points, more than Secured Overnight Financing Rate (SOFR). 

The most recent international rate gauge used in debt offering pricing is called SOFR.

The oil-to-telecom giant is aiming to raise a new $2 billion loan as it completes the drawdown of current debt that it started last fiscal year.

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