PSU non-banks slow offshore borrowing as cost edge shrinks

The Reserve Bank of India created a special deal to help government-owned companies borrow money from other countries more cheaply.

This deal was supposed to save them money.

But just about seventy days later, the savings are almost gone.

This happened because US government bonds now pay more interest.

Also, many Indian banks are rushing to borrow dollars, which makes it more expensive.

Now the cost of borrowing overseas is only a tiny bit cheaper than borrowing in India.

The difference is only 8 to 10 basis points, which is a very small amount.

Because of this, these companies are not rushing to borrow from other countries.

They are thinking about whether to borrow now, wait for better rates, or just borrow in India instead.