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Mashreq Bank on Tuesday announced its entry into the non-bank financial institution (NBFI) space in India through an engagement with IL&FS Financial Services Ltd to offer external commercial borrowings (ECB) in Indian rupees.
Through the IL&FS Group, Mashreq will serve the Indian market across various verticals including financial services, power, transport infrastructure, real estate and education, providing new avenues for Indian companies to borrow from overseas markets.
“We have come to an agreement with IL&FS Group, one of the largest institutions in India. Through this agreement, we have provided an opportunity for corporate institutions across India to borrow from the International market on terms specific to the rupee. This allows the borrower to expand their funding sources without any exchange risk, with marginal savings in pricing and elongated tenor,” Ahmad Abdelaal, head of the Corporate & Investment Banking Group of Mashreq Bank, said in a statement on Tuesday.
This borrowing facility is extended through the automatic route of the rupee external commercial borrowings guidelines issued by Reserve Bank of India (RBI).
“The collaboration between IL&FS [through IL&FS Financial Services] and Mashreq Bank will go a long way to support the capital raised for infrastructure development in India. We have been actively working with several institutions globally on innovative funding models, [and] this ECB is a testimony of the same. Such foreign borrowings not only complement the efforts of domestic institutions to fund infrastructure projects but also help in diversification of funding sources. We look forward to further strengthening this relationship and grow the India-UAE business corridor,” stated Ramesh C. Bawa, managing director & CEO of IL&FS Financial Services.
IL&FS Group was the pioneer in raising the first ever ECB in Indian rupees, popularly referred to as Masala Loans, in November 2016. Historically, NBFIs predominantly borrowed from banks and other institutions in their domestic market. Through this agreement, Mashreq Bank has opened new avenues for external commercial borrowings funded through the UAE and disbursed in Indian rupees.
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