ECBs decline 15.3% in January

Foreign currency loans by the Indian companies declined 15.3 per cent to $1.32 billion (Rs 6,100 crore) in January 2010 from $1.56 billion (Rs 7,176 crore) a year ago, according to data released by the Reserve Bank of India (RBI). The external commercial borrowings (ECBs) fell as overseas markets re-opened after the holiday season.

Generally, overseas borrowing activity slows in the month of December with the onset of holiday season in the western markets. In November 2009, foreign currency borrowings totalled $ 2.35 billion.

The $500-million bond issue by the state-run Indian Oil Corporation was the biggest contributor to the January figures. Adani Power and Bhushan Steel, which borrowed about $100 million each, were among other big borrowers.

There were no foreign currency convertible bond issues in January.

“The numbers are only expected to rise from here. Loan syndications, dollar bonds and convertible bonds are expected to pick up this year,” said Kaustubh Kulkarni, director, capital markets, Standard Chartered Bank.

Indian companies have borrowed $15.16 billion from the overseas markets so far during the current financial year, as compared to $16.8 billion borrowed during the same period last year. Both figures seem pale in comparison to the $25.62 billion borrowed during the same period in 2007-08.

RBI has recently introduced changes in the procedure for ECBs. According to revised norms, loan arrangers will be able to make changes in the drawdown or repayment schedules, as long as the average maturity of the loan remains the same.