As many as 25 large companies may find it difficult to arrange Rs 53,200 crore to repay debt this financial year after the Reserve Bank tightened norms for domestic firms borrowing foreign currency overseas to retire rupee loans.
"An estimated 25 large corporates with a cumulative refinancing requirement of Rs 53,200 crore this fiscal and overall bank debt of Rs 2,34,400 crore may find it increasingly challenging to efficiently refinance their debt if their forex earnings do not improve significantly," India Ratings said in a report today.
According to the agency, the top 100 domestic companies have to repay Rs 1.9-2.1 trillion this financial year and many of them may find it difficult to arrange funds following the RBI's move.
Companies borrow overseas as they save close to 6 per cent on interest costs compared with domestic rates.
According to India Ratings, there are 21 companies that it classifies as having an elevated risk to refinance. Twelve of them have a debt exposure of Rs 1,59,500 crore and need Rs 30,500 crore in refinancing and will be affected by the RBI decision. These 12 companies also have insignificant export earnings and limited foreign operations.
In the other category, with medium ease to refinance, there are 13 companies with bank loan exposure of Rs 74,900 crore and refinancing requirement of Rs 22,700 crore, which may not be able to access low-cost external commercial borrowings.
Of the top 100 borrowers analysed, as many as 38 with bank loan exposure of Rs 5,10,800 crore, which were tagged under the 'no refinancing risk' and 'high ease to refinance' categories, will only be marginally impacted.
The RBI on April 22 disallowed the refinancing of rupee loans through ECBs from overseas branches and subsidiaries of Indian banks, saying the risk remains within the country's banking system.
