Bajaj Finance, India’s biggest non-banking financial company, is planning to borrow up to $500 million from foreign banks. This move comes as new rules from the Reserve Bank of India (RBI) have made it harder for companies like Bajaj Finance to get loans from Indian banks.
The company is in talks with at least four international banks to finalize the terms of the loan, which could last between three to five years. The interest rate for the loan will be linked to the Secured Overnight Financing Rate, a common benchmark in Asia.
Bajaj Finance plans to raise the money through the RBI’s external commercial borrowing route, which limits the interest rate to 500 basis points above the benchmark rate.
As Indian banks face stricter regulations, other shadow financiers like Manappuram Finance, Muthoot Finance, and Piramal Capital & Housing Finance have also turned to global markets for funds. Bajaj Finance, which is part of one of India’s oldest business groups, specializes in loans for vehicles, consumer appliances, and mortgages.
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