Bajaj, India's largest non-banking financing company by market value intends to borrow up to $500 million abroad. This makes it the latest shadow lender to go for international funding after tighter laws restricted its domestic alternatives.
According to individuals who requested anonymity due to the confidential nature of the talks, Bajaj Finance Ltd. is now in the process of discussing the conditions of the loan with a minimum of four international banks. They said that the debt's duration maybe three to five years and that the price would be determined by the Secured Overnight Financing Rate, which is a typical benchmark for transactions in Asia.
The money will be raised under the external commercial borrowing program of the Reserve Bank of India, where interest rates are capped at 500 basis points over the benchmark rate. Regarding the deal, a Bajaj Finance representative declined to comment.
Many local shadow financiers are taking advantage of the global credit market after the RBI's request that banks increase consumer loan buffers in order to reduce hazardous lending. These lenders are finding it harder to obtain bank loans as a result of the regulatory change, which has forced them to look for other options in the credit market.
Among the shadow financiers who have taken out loans overseas this year are Piramal Capital & Housing Finance Ltd. and two suppliers of gold loans, Manappuram Finance Ltd. and Muthoot Finance Ltd. The largest lender in India based on market value, HDB Financial Services Ltd., is now borrowing money from outside sources.
One of the oldest companies in India, Bajaj Finance, offers loans for the purchase of consumer appliances and two- and three-wheelers made by the group firm Bajaj Auto Ltd. In addition, the well-regarded organization offers mortgage and personal loans.
