Mumbai: The Reserve Bank of India (RBI) has turned down state-run Power Finance Corp’s (PFC) $200 million (Rs810 crore) yen-denominated loan application because of new curbs on foreign borrowings, a company official said on 10 September.
“They turned it down, citing a change in regulations,” Satnam Singh, director of finance, told Reuters. “We have to now look at the local markets to raise the funds.”
Power Finance, which has previously used foreign loans to fund local power projects, had sought central bank approval in August to borrow the equivalent of $200 million in Japanese yen.
Last month, the government said local companies must get central bank approval to bring in proceeds of foreign loans up to $20 million, and said funds from a foreign loan above $20 million had to be kept outside the country.
Earlier, Indian companies were allowed to raise up to $500 million from overseas without the central bank’s approval. The New-Delhi based firm had invited ICICI Bank, HDFC Bank, BNP Paribas, Calyon Bank, Bayern LB among others for indicative prices in August, and was waiting for the central bank’s nod to award the final mandate.