External commercial borrowings (ECB) from Indian corporates picked up in September with companies raising $3.34 billion during the month, an increase of 45% over the previous month, according to data released by RBI.
For the second time in three months, a bulk of ECB was on account of Reliance Industries (RIL), which took approval to borrow $2.3 billion during the month. The amount was spread across different loan facilities by RIL, which included refinancing of existing ECB and expenditure on account of import of capital goods.
In July, ECB data showed that RIL had raised $2.5 billion for import of capital goods. This had pushed up overall external borrowings in July to a four-month high of $3.7 billion.
ECB data is collated by the RBI based on the sanction of external borrowings on a monthly basis. Apart from RIL, overseas funds were raised by IDFC, HPCL and Essar Steel during the month.
Interestingly, forex loans raised through RBI approval route were far higher than the automatic route. A total of $2.5 billion was raised through the approval route, while only $800 million was raised through the automatic route.
Under the automatic route, companies do not need prior RBI approval for borrowing in foreign currency.
Indian companies have continued to access foreign borrowings through out this year via a mix of loans and bonds as the cost of borrowing overseas remains lower than in India. While bond issuances had dominated fundraising until May, loan facilities have been preferred in the recent months as the global bond markets have turned volatile.
