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The overseas loan book of six Indian banks rose between 7 and 33 per cent in FY22, primarily on an upturn in trade, which pushed the demand for trade finance.
However, external commercial borrowings — loans raised by Indian companies abroad — were muted. This is because they tapped domestic sources due to cheap money available back home amid abundant liquidity.
Bank officials said India-centric business had predominant share — funding exports and imports as well as terms loans. Along with this, lenders are also financing high-rated companies in local markets. However, the size of loan and share in local corporate business is small.
State Bank of India (SBI) reported 15.42 per cent growth in its international loan book at Rs 4.12 trillion in FY22.
Ashwini Kumar Tewari, managing director (international banking, subsidiaries), SBI, said the bank expects momentum (about 15 per cent) in international loan expansion in FY23 as seen in FY22. This is with support of trade finance and factoring. It is providing supply chain finance in partnership with large banks on their platforms.
The intent is to generate more business from Indian companies on its own platform. On demand for overseas loans from Indian firms, bank officials said it would depend on how the cost of funds shapes up in light of rising interest rates across the geographies.
Indian corporates would raise money overseas if the cost of hedging of currency risks plus loan rates turn beneficial compared to cost of funds in the domestic market.
ICICI Bank — in an analysts’ call — said the overseas loan portfolio, in dollar terms, grew 5.9 per cent year-on-year (YoY) and was flat sequentially on March 31, 2022.
The YoY increase in the overseas loan portfolio of these banks was primarily due to rise in the India-linked trade finance book. The overseas loan portfolio was 4.8 per cent of the overall loan book as on March 31, 2022.
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