Public Sector Enterprises Expected to Raise Over $15 Billion Through ECBs Amid RBI Incentives
PSU ECB borrowings may cross $15 billion on RBI's concessional swap window
Image: Business Standard
State-owned enterprises in India are projected to increase overseas borrowings to over $15 billion this year, leveraging a 3% funding-cost advantage from the Reserve Bank of India's new measures aimed at attracting foreign capital inflows. This includes a concessional forex swap facility for external commercial borrowings.
- 01Public sector enterprises (PSUs) typically raise $10-12 billion annually through external commercial borrowings (ECBs).
- 02The Reserve Bank of India's new measures include a subsidised window for non-resident Indian deposits and a concessional forex swap facility.
- 03Barclays estimates that ECB issuances could reach $10-15 billion in the coming months, despite elevated global rates.
- 04Indian firms raised a record $61.2 billion through ECBs in FY25, reflecting strong credit demand and favorable market conditions.
- 05Major PSUs like PFC, REC, and IOC have recently tapped ECBs, accounting for 11% of total issuances in FY26.
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State-owned enterprises in India are likely to ramp up their overseas borrowings this year, potentially exceeding $15 billion due to a 3% funding-cost advantage offered by the Reserve Bank of India's (RBI) new measures. The RBI has introduced a subsidised window for non-resident Indian deposits and a concessional forex swap facility to encourage public sector enterprises (PSUs) to raise external commercial borrowings (ECBs) until September 30, 2026. Barclays predicts that these incentives could lead to an uptick of $10-15 billion in ECB issuances over the next few months, although demand may be limited by high global interest rates. In FY26, PSUs raised $4.9 billion through ECBs, representing 11% of total issuances. The RBI's measures aim to reverse a 30% decline in total ECB flows, which fell from $61.2 billion in FY25 to $42.9 billion in FY26. Major PSUs such as PFC, REC, and IOC have already participated in this trend, underscoring the ongoing appetite for overseas funding.
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The increase in ECB borrowings could ease pressure on domestic bank credit and enhance funding availability for public sector projects.
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