Mobilization through external commercial borrowing (ECB) has more than doubled to $20.3 billion. These figures are between April last year and February this year compared to a year ago. This is partly due to the reduction in the cost of raising foreign funds. According to data released by the Reserve Bank of India, $8.8 billion was raised between April 2023 and February 2024, the highest in at least five years. $1.9 billion was raised in February this year, whereas a year ago i.e. in February 2024, $1.3 billion was raised through external commercial borrowings.
Overall, there have been registrations for external commercial borrowings of $50.1 billion and disbursements of $46.1 billion between April last year and February this year, which is higher than the registrations of $8.6 billion and disbursements of $13.4 billion last year.
Soumyajit Niyogi, director of India Ratings and Research, told Business Standard that the overall lending rate has declined by about 40 to 50 basis points compared to April last year. Further rate cuts are expected in America. Most ECBs are linked to a six-month to one-year benchmark rate.
According to the State of the Economy article published in the RBI’s April bulletin this year, the total cost of registered ECBs declined by 35 basis points over the year, driven by declines in global interest rates and secured overnight financing rates (SOFR) and weighted average interest margins (WAIM). Before that, between April 2023 and February 2024, global benchmark rates like SOFR were stable but at high levels. After Donald Trump became the President of America in January this year and a series of policy announcements were made by his administration, the situation in the markets around the world changed.
First Published – April 24, 2025 | 11:16 PM IST
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