26 March 2024 – The ₹31-lakh crore Tata Group’s main financial services firm, Tata Capital, has received $200 million with a three-year loan from DBS Bank in Singapore and CTBC Bank in Taiwan.
In accordance with changes in the market, the corporation is able to set the loan’s price 120 basis points higher than the Secured Overnight Financing Rate (SOFR) for a certain duration of one, three, or six months. The loan is a component of the business’s ongoing borrowing plan. 0.01 percentage points make up one basis point. According to Reserve Bank of India (RBI) norms, the business obtained the cash as part of its $750-million external commercial borrowing (ECB) program, as verified by CEO Rajiv Sabharwal.
This is a regular component of our fundraising strategies. We may diversify our financial needs by taking out foreign loans. According to Sabharwal, the landed cost of funds is comparable to our domestic cost of funds.
Conclusion
Tata Capital would initially pay around 6.55% for these dollar funds at a rate of 120 basis points over the three-month SOFR rate, which is now about 5.35%. However, the ultimate rate in rupees may be higher after hedging and tax liabilities. Despite greater financing expenditures, the company’s net profit for the quarter ending December 2023 was ₹1,023 crore, up 78% from the same time the previous year.
