Bajaj Finance Ltd., India’s largest non-banking finance company by market value, is seeking to raise up to $500 million through an offshore loan. This move comes as a response to stricter domestic regulations that have limited local financing options.
The company is in discussions with a consortium of at least four international banks to arrange the loan, which is expected to have a tenor of three to five years. The interest rate will be capped at 500 basis points above the benchmark rate, in line with the Reserve Bank of India’s external commercial borrowing guidelines. The loan’s pricing will be linked to the Secured Overnight Financing Rate, a standard benchmark in Asia.
A Bajaj Finance spokesperson declined to comment on the details of the transaction. This loan is part of a broader trend where local shadow banks are turning to the global credit market due to RBI regulations requiring banks to raise reserves for consumer loans to mitigate risky lending.
Other shadow financiers, such as Manappuram Finance Ltd., Muthoot Finance Ltd., and Piramal Capital & Housing Finance Ltd., have also sought international funding this year. HDB Financial Services Ltd., a unit of India’s largest lender by market value, is in the process of securing foreign capital as well.
Bajaj Finance, affiliated with one of India’s oldest conglomerates, provides a range of loans, including those for two- and three-wheelers produced by its group company Bajaj Auto Ltd., as well as consumer appliances, personal loans, and mortgage loans.
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