India Inc's rising forex exposure worries RBI

The central bank plans to issue a new policy on foreign exchange loans by December

Unhedged foreign loans of Indian companies is worrying RBI. It said such exposure were risky for both individual firms and the entire financial system. It plans to issue a new policy on foreign exchange loans by December. Indian firms hold nearly $200 billion worth of debt in foreign currency and of this, only half is hedged, say rating firm CRISIL. Any volatility raises the prospect of default for the rest. "RBI wants to de-risk the economy from currency-induced credit risk factors due to such borrowings," said P K Ghose, executive director and chief financial officer, Tata Chemicals.