India Inc's foreign borrowings decline 20.2% in CY2024 amid rupee fall

Bankers added that ongoing global market volatility has made corporates cautious, leading to a slowdown in overseas borrowings

This week we report about a Finance Ministry department calling a meeting on business correspondents, a channel vital for financial inclusion. We find out why Indian companies are borrowing long term.  

January 17, 2025 | Friday

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Hello reader,

Welcome to the Business Standard BFSI Pulse newsletter, your curated view of the goings-on in the financial world this past week. 

 

Our lead story is about the Finance Ministry’s Department of Financial Services calling a meeting of the monitoring committee on the functioning of business correspondents (BC) on January 21. BCs have of late been raising the issue of the channel’s viability with the Finance Ministry, warning that it is becoming unviable.  This week, the rupee tumbled the psychologically crucial mark of 86 against the dollar to log its steepest single-day fall in nearly two years. After hitting fresh lows for five consecutive sessions, the rupee on Wednesday recorded its best single-day gain versus the dollar in more than seven months.  The rupee may experience some volatility in the early days of Donald Trump’s presidency, but it is likely to stabilise soon after, according to a report by the State Bank of India that termed the phenomenon as “Trump Tantrum”.   Meanwhile, with short-term rates firming up due to tight liquidity conditions, Indian corporates are opting to borrow long term to take advantage of the attractive rates by locking them in these uncertain times.   The first phase of Bima Sugam — a project of the insurance regulator to create an Amazon-like one-stop digital platform for buying, selling and servicing insurance policies — is expected to be rolled out in the mid of this year instead of April announced earlier.  With rising disposable incomes in cities beyond metros, the penetration of credit cards — and consequently, credit card spending — is growing at a much faster pace than in traditional metro cities, primarily driven by e-commerce spending. Other segments, including travel, online gaming, and online education, are also showing extensive increases, said Sushmit Nath, head of consulting and analytics, India and South Asia at Visa, in a conversation with Business Standard.  Our data story tracks how Indian companies raised Rs 3.64 trillion through the external commercial borrowing (ECB) route in 2024 till October. It was the highest such borrowing in five years.

 

Thanks for reading

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THE LEAD STORY

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Business correspondent channel under stress, finance ministry dept calls meeting

The Finance Ministry’s Department of Financial Services has called a meeting of the monitoring committee on the functioning of business correspondents (BC) on January 21. BCs have of late been raising the issue of the channel’s viability with the Ministry, warning that it is becoming unviable. The meeting is to be attended by representatives of two groups representing business correspondents, the Indian Banks’ Association and the top brass of state-run and private banks, reports Raghu Mohan. Read more

THE DATA STORY

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Indian companies raised Rs 3.64 trn in ECB in 2024, most in 5 years  

India Inc. in the calendar year 2024 (till October) raised Rs 3.64 trillion through the external commercial borrowing (ECB) route, which is the highest in the last five years. Companies use ECB for expansion of existing capacity as well as for fresh investments. Back in 2019, India Inc had raised Rs 3.50 trillion. Read more

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BS EXCLUSIVE

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Indian companies opt for long-term borrowing as short-term rate spikes