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Mumbai: Tata Capital, the flagship financial services company of the ₹31-lakh crore Tata Group, has raised $200 million through a three-year loan from Singapore’s DBS Bank and Taiwan’s CTBC Bank.

The company has the flexibility to price the loan 120 basis points above the one-month, three-month or six-month Secured Overnight Financing Rate (SOFR), in line with the market movement. The loan is part of the company’s regular borrowing programme. One basis point is 0.01 percentage point.

CEO Rajiv Sabharwal confirmed the company had raised the funds as part of its $750-million external commercial borrowing (ECB) programme, in line with the Reserve Bank of India (RBI) guidelines.

“This is part of our routine fund-raising plans. Borrowing overseas funds helps us diversify our funding requirements. The landed cost of funds is almost or on par with our domestic cost of funds,” Sabharwal said.

At 120 basis points above the three-month SOFR rate, now around 5.35%, Tata Capital would pay around 6.55% for these dollar funds initially, though post hedging and tax obligations, the final rate in rupees could be higher.

ET could not ascertain the current cost of funds for the company’s domestic rupee resources for a similar tenure.

The company made a ₹1,023-crore net profit in the quarter ended December 2023, up 78% from the same period a year ago, largely due to higher interest income even though financing expenses also increased. The company’s loan book stood at ₹1.49 lakh crore at the end of December, with about 90% of the loans to retail and SME customers.

Domestic bank loans and non-convertible debentures make up 86% of Tata Capital’s funding profile with ECBs at 6%, similar to the company’s liability mix a year ago, a presentation on its website showed.

  • Published On Mar 26, 2024 at 08:20 AM IST

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