Mumbai: State-run Power Finance Corp is waiting for the Reserve Bank’s approval to raise $200 million loan denominated in Japanese yen, company officials said on Wedesday, 22 August.
“We have written to the Reserve Bank of India seeking their approval,” said Satnam Singh, director of finance, told Reuters. “We had already invited bids and we are just waiting to award the mandate.”
Earlier Indian companies were allowed to raise up to $500 million from overseas without RBI approval.
The government tightened the rule this month and said companies must seek the central bank’s approval for raising money overseas to curb huge capital inflows that were putting upward pressure on the rupee.
Companies can now bring in foreign loans up to $20 million with the central bank’s permission, but any amount beyond that limit must be kept abroad for their overseas expenses.
Power Finance raises loans overseas to fund local power projects.
The New-Delhi based firm had invited ICICI Bank, HDFC Bank, BNP Paribas, Calyon Bank, Bayern LB among others for indicative prices, company officials said.
It is seeking yen loans because of low Japanese interest rates and company officials said the recent spate of volatility in global credit markets would not impact its borrowing costs.
Global markets have been roiled recently due to the US subprime mortgage crisis.
“We had asked for bids, before this crisis blew up and the price quotations we got from them are still valid for some time,” said a company official who did not wish to be identified.