Lender SMFG raises $175 mn through ECB facility on a fully hedged basis

Company to use fund to expand portfolio and provide 'greater access to credit for individuals and businesses'

SMFG India Credit (SMICC) has raised $175 million through an external commercial borrowing (ECB) facility and will use the money for lending and expanding its portfolio, it said on Tuesday.

 

The facility was jointly arranged by Standard Chartered Bank and CTBC Bank. SMICC, which was formerly known as Fullerton India Credit, has fully hedged the facility to mitigate risks associated with foreign exchange and interest rate fluctuations.

 

SMICC is a wholly owned subsidiary of Japan-based Sumitomo Mitsui Financial Group (SMFG). Together with its subsidiary, SMFG India Home Finance (formerly Fullerton India Home Finance), it is known as SMFG Grihashakti. It offers a range of lending solutions, including financing for small and medium enterprises, commercial vehicle and two-wheeler loans, home loans, home improvement loans, loans against property and shares, personal loans, and rural livelihood advancement loans. 

 

“This syndicated loan facility is a testament to SMFG India Credit’s strong financial standing and robust growth outlook. With this funding, we aim to strengthen our lending capabilities, ensuring greater access to credit for individuals and businesses while maintaining a prudent risk management framework,” said Pankaj Malik, chief financial officer of SMICC.

 

The US dollar/ Indian rupee (USD/INR) buy-sell swaps conducted by the Reserve Bank of India (RBI) to inject durable liquidity into the banking system have led to a decline in forward premia on USD/INR contracts, reducing hedging costs for Indian corporates seeking to borrow from overseas markets. With the rupee gaining against the US dollar, the cost of borrowing has become attractive for Indian corporates looking to raise funds overseas.

 

According to RBI data, net inflows from the ECB more than doubled to $18.4 billion from April 2024 to January 2025 period from a year ago as the cost of overseas fundraising declined. ECB registrations of $47.3 billion and disbursements of $42.3 billion from April 2024 to January 2025, on a cumulative basis, were significantly higher.