NEWS & ADVICE : PERSONAL LOAN
Indian businesses seek options other than bank loans
By Vaibhav Aggarwal
Dec 22, 2009
Print    Email    RSS   

Indian companies are looking for options other than bank loans to fund their expansion plans. A strong recovery in the economy seems prominent but Indian banks are sitting on lot of capital mainly from private equity placements and overseas borrowings.

Over two-thirds of financing requirements of the companies during the April-September period came from non-banking sources. Official data revealed that there had been a sharp drop in bank credit to commercial sector in the first half of the current fiscal.

Firms prefer unconventional sources like qualified institutional placements (QIPs) of shares sold at mutually agreed price, borrowings from overseas banks that cost them relatively less and bonds issued by the companies. In 2009, companies have raised about Rs. 32,558 crore through the QIP route.

 

"Though the growth of credit has been significantly low despite recovery in the economy and is becoming a cause for concern, large number of corporate houses has gone in for non-banking sources of revenue," a senior Finance Ministry ministry said.

External Commercial borrowings (ECBs) are cheaper by nearly three percentage points compared to domestic banks. While loan from overseas banks are available at an interest rate of 8 percent, the interest rate charged by domestic banks is over 11 percent.

JM Garg, Chairman and Managing Director, Corporation bank said, "With sentiments remaining low for most part of the year, companies were focussed on cost saving measures."

Demand for bank credit is likely to remain low over the nest few months amidst signs that the Reserve Bank of India (RBI) would hike interest rates to control inflation.

According to DK Joshi, chief economist, Crisil, with rising inflation, the apex bank is expected to adopt some corrective measures.

 


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Central Bank of India ordered to return...
Now, Do Banking on Social Media Sites
Bankers concerned on RBI loan recovery...
Personal loan EMI calculator from RupeeTimes
Consolidation good for creating healthier...


WE OFFER GOOD SERVICE/ QUICK LOAN SERVICE OFFER...
Loan to meet your needs. For more information...
HOTEL: CaℒL Giℛℒs In Kharar 09855660911...
Model Escoℛts Service In Pune 8888IOO484 Caℓℓ...
What is the outstanding Amount for my personal loan

NEWS THIS WEEK
LVB bank joined hands with NCML Feb 18, 2015
Syndicate Bank hiring 5000 new staff Feb 12, 2015
SBI donated Rs 8.6 cr as a part of CSR activity Feb 11, 2015
Canara Bank tied up with NHBC Feb 9, 2015
Hiring for Probationary clerks in South Indian Bank Feb 5, 2015
News Archive