Source: Business Standard

 

With global interest rates hovering at near zero levels, India Inc used FCCBs (Foreign Currency Convertible Bonds) and ECBs (External Commercial Borrowings) to fund their businesses. But now these 'cheap loans' are turning out to be something of a curse for the companies. As per RBI's data, a large part of these loans are coming up for repayment in this year. These are related to the approvals made during FY07 and FY08 which as shown in the chart are sizeable amounts. With the steep fall in the rupee's value, the repayment amount related to these loans has gone up. The Business Standard estimates that the principal repayment cost could go up by 25 - 30% due to the fall in rupee's value. This would further hurt the fina ncials of the companies that are already stretched thanks to the tough business conditions in the economy.