Reliance Industries is planning to use the money to fund working capital needs Reliance Industries is planning to use the money to fund working capital needs Reliance Industries is planning to use the money to fund working capital needs Mukesh Ambani-led Reliance Industries Ltd has reportedly received the Reserve Bank of India (RBI)'s nod which will allow it to retain the extra $2 billion, over and above the $3 billion it had raised last financial year, to expand operations.
RIL had sought RBI’s permission to retain the amount ($2 billion) as it was collected above the limits mandated by Mint Road, sources quoted in a report in The Economic Times stated. Reliance Industries is planning to use the money to fund working capital needs and utilise it to expand its new energy and telecom businesses.
"Given Reliance's strong credit rating and cash flows, banks across the globe wanted to participate in the loan exercise back in March. The strong demand for the loan after two rounds of syndication meant that there was still money on the table banks were willing to offer; so, the company decided to retain more than it needed," said sources quoted in the report.
"This is not the first time RBI has given permission for such an increase. Reliance itself has sought special permission from the RBI before," the official added.
RIL’s deal was billed as one of the most sought-after credit deals in India in recent times. The loan syndication was completed at the end of March, with more than three dozen banks participating.
Earlier it was reported that at least 10 more lenders will join the third leg of the syndication of $3 billion loans to Reliance and Reliance Jio Infocomm.
Another source said: “RIL had approached the RBI to retain the $2 billion over and above the $3 billion it had sought to raise last fiscal. These approvals are granted on a case-by-case basis as the company has to make a sound business case to raise this kind of money."
“The approvals came earlier this month following which the company will draw down the extra amount later this month,” the official further said.
As per RBI's rules on External Commercial Borrowings (ECB), an individual company can avail up to $750 million per fiscal year. Beyond this limit, companies need to take special permission from the central bank to raise money abroad.
The loan is a five-year ECB and is the largest through syndicated term loans by an Indian corporate house in at least five years. Banks from the UK, the US, India and countries such as South Korea, Taiwan and Mauritius were part of the syndication.
RIL was marked as the most valuable private sector company among the top 500 companies in India, as per Hurun India’s ‘2022 Burgundy Private Hurun India 500’. The list, which was released on Tuesday, stated that with a value of Rs 16.3 lakh crore, Reliance Industries is India’s most valuable company, followed by Tata Consultancy Services (TCS) with Rs 11.8 lakh crore and HDFC Bank with Rs 9.4 lakh crore.
In 2022, Reliance Industries, Tata Consultancy Services, and HDFC Bank were in the top 3 positions, with values of Rs 17.3 lakh crore, Rs 11.6 lakh crore, and Rs 8.3 lakh crore, respectively.