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India’s biggest shadow bank Bajaj Finance aims to borrow $500 million loan

Submitted by admin on August 13th, 2024

The largest India’s non banking finance company by market capitalisation is keen on borrowing up to $500 million overseas, people close to the development said, joining a clutch of shadow financiers seeking external funds as local sources dried up due to the crackdown.

Bajaj Finance Ltd., an Indian consumer-finance company, is finalising the details of an overseas debt facility having a minimum involvement of four foreign banks, sources said on condition of anonymity due to the vagueness of the information. The term on the debt may be between three and five years, and the pricing tied to SOR, which is increasingly becoming popular with deals in Asia, or SOFR, they said.

These will be raised under the fresh external commercial borrowing standard set by the Reserve Bank of India that has fixed the interest rate at 500 basis points above the benchmark level.
Bajaj Finance’s public relations did not want to elicit comment regarding the deal.

Some of the leading Indian shadow financiers are accessing global credit market after RBI pressed banks to build up extra capital for consumer credit to slow risky lending. Originally, the rule change has raised the problem of how these lenders can raise bank loans, leaving them with no option than to explore credit market.

Gold loan companies such as Manappuram Finance Ltd. and Muthoot Finance Ltd. along with Piramal Capital & Housing Finance Ltd. are among those shadow financiers who have borrowed abroad this year. HDB Financial Services Limited a subsidiary of India ’s largest lender in terms of market capitalization is planning to take foreign currency funds.

Bajaj Finance is a financier which is a part of one of the oldest Indian business groups and provides auto loans for the purchase of two- and three-wheelers produced by the affiliate Bajaj Auto Ltd and consumer durables. The top rated company is also involved in business of offering of personal and mortgage loans.